Personal tax allowance, NI and income tax rates 2021/22
In the November Spending Review, Chancellor Rishi Sunak announced that some income tax and National Insurance rates and allowances would increase by 0.5%. This figure was in line with the Consumer Price Index annual increase to September 2020. However, since then, the Financial Secretary to the Treasury has confirmed that NI rates will increase by 0.5%. So, based on what we know so far, what will the personal tax allowance, National Insurance and Income Tax rates be for 2021/22?
National Insurance Rates
The Government has now published this table of National Insurance rates, limits and thresholds in this pdf file. We have reproduced the figures below for your convenience.
Class 1 NICs (Employee and Employers)
Class 1 NICs: Employee and Employers (£ per week) | ||
Tax year 2020-21 | Tax year 2021-22 | |
Weekly Lower Earnings Limit (LEL) | £120 | £120 |
Weekly Primary Threshold (PT) | £183 | £184 |
Weekly Secondary Threshold (ST) | £169 | £170 |
Upper Earnings Limit (UEL) | £962 | £967 |
Upper Secondary Threshold for under 21s | £962 | £967 |
Apprentice Upper Secondary Threshold (AUST) for under 25s | £962 | £967 |
Class 2 NICs (Self Employed)
Class 2 NICs: Self Employed | ||
Tax year 2020-21 | Tax year 2021-22 | |
Small Profits Threshold (SPT) (£ per year) | £6,475 | £6,515 |
Class 2 contribution rates | Tax year 2020-21 | Tax year 2021-22 |
Annual Profits (£ per year) | £ per week | £ per week |
Below SPT | £3.05 (voluntary) | £3.05 (voluntary) |
Above SPT | £3.05 | £3.05 |
Class 3 NICs (Voluntary)
Class 3 NICs: Voluntary Contributions (£ per week) | ||
Tax year 2020-21 | Tax year 2021-22 | |
Voluntary contributions | £15.30 | £15.40 |
Class 4 NICs (Self Employed
Class 4 NICs: Self Employed (£ per year) | ||
Tax year 2020-21 | Tax year 2021-22 | |
Lower Profits Limit (LPL) | £9,500 | £9,568 |
Upper Profits Limit (UPL) | £50,000 | £50,270 |
Income Tax personal allowance
The personal tax allowance for 2021/22 should increase to £12,570 – up from £12,500 in 2020/21. However, this figure is rounded up to the nearest £10, as required by the Income Tax Act 2007.
Basic rate limit
The income tax basic rate limit should be set at £37,700 – up from £37,500. Once again, this figure is rounded up to the nearest £100, again in accordance with the 2007 Act.
Pensions
The Lower Earnings Limit (LEL) remains at £120 per week. Basic and new state pensions go up 2.5% from 12 April 2021.
Conclusion
Precise Income Tax rates are normally announced in the Chancellor’s Autumn Statement. For obvious reasons, this didn’t happen last year because of the Coronavirus pandemic. So, while the figures above reflect our understanding of upcoming income tax, personal allowance and NI changes, if further changes are announced we will let you know. Of course, if you’d like help with your annual tax return, please get in touch.
About Jon Pryse-Jones
Since joining THP in 1978, Jon Pryse-Jones has been hands on with every area of the business. Now specialising in strategy, business planning, and marketing, Jon remains at the forefront of the growth and development at THP.
An ideas man, Jon enjoys getting the most out of all situations, “I act as a catalyst for creative people and encourage them to think outside the box,” he says, “and I’m not afraid of being confrontational. It often leads to a better result for THP and its clients.”
Jon’s appreciation for THP extends to his fellow team members and the board. “They really know how to run a successful business,” he says. He’s keen on IT and systems development as critical to success, and he continues to guide THP to be at the cutting edge and effective.
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