Institute of Chartered Accountants England and Wales

Tax rates

Please use the menu below to view the current tax rates.  If you have any questions, you can call on 01234 888703 or send us a message here.

Income Tax

Allowances 2021/22 2020/21
Personal Allowance (PA) * £12,570 £12,500
Marriage Allowance † £1,260 £1,250
Blind Person's Allowance £2,500 £2,500
Rent a room relief** £7,500 £7,500
Trading Income** £1,000 £1,000
Property Income** £1,000 £1,000

* PA is withdrawn at £1 for every £2 by which 'adjusted income' exceeds £100,000. There is no allowance above £125,140.

†The part of the PA that is transferable to a spouse or civil partner who is not a higher or additional rate tax payer.

**If gross income exceeds this, the limit may be deducted instead of actual expenses.

Rate Bands 2021/22 2020/21
Basic Rate Band (BRB) £37,700 £37,500
Higher Rate Band (HRB) 37,701-150,000 37,501-150,000
Additional rate over £150,000 over £150,000
Personal Savings Allowance (PSA)    
- Basic rate taxpayer £1,000 £1,000
- Higher rate taxpayer £500 £500
Dividend Allowance (DA) £2,000 £2,000

BRB and additional rate threshold are increased by personal pension contributions (up to permitted limit) and Gift Aid donations.

Tax rates 2021/22 & 2020/21
Rates differ for General/Savings/Dividend income G S D
Basic rate 20% 20% 7.5%
Higher rate 40% 40% 32.5%
Additional rate 45% 45% 38.1%

General income (salary, pensions, business profit, rent) usually uses personal allowance, basic and higher rate bands before savings income (interest).  Scottish taxpayers are taxed at different rates on general income (see below).

To the extent that savings income falls in the first £5,000 of the basic rate band, it is taxed at nil rather than 20%.

The PSA taxes interest at nil where it would otherwise be taxable at 20% or 40%.

Dividends are normally taxed as the 'top slice' of income. The DA taxes the first £2,000 of dividend income at nil, rather than the rate that would otherwise apply.

Income tax - Scotland 2021/22 2020/21
Starter Rate 19% £2,097 £2,085
Basic Rate 20% 2,098 - 12,726 2,086 - 12,658
Intermediate Rate 21% 12,727 - 31,092 12,659 - 30,930
Higher Rate 41% 31,093 - 150,000 30,931 - 150,000
Top Rate 46% over 150,000 150,000

The Scottish rates and bands do not apply for savings and dividend income, which are taxed at normal UK rates.

High Income Child Benefit Charge (HICBC

1% of child benefit for each £100 of adjusted net income between £50,000 and £60,000.

Remittance basis charge 2021/22 2020/21
For non-UK domiciled individuals who have been UK resident in at least:    
7 of the preceding 9 tax years £30,000 £30,000
12 of the preceding 14 tax years £60,000 £60,000
15 of the preceding 20 tax years Deemed to be UK domiciled.

Pensions

Registered Pensions 2021/22 2020/21
Lifetime allowance (LA) £1,073,100 £1,073,100
Annual allowance (AA) * 40,000 40,000

Annual relievable pension inputs are the higher of earnings (capped at AA) or £3,600

* Usually tapered (down to a minimum of £4,000) when adjusted income exceeds £240,000.

State pension (per week) 2021/22 2020/21
Old state pension - Single person £137.60 £134.25
Old state pension - Married couple £220.05 £214.70
New state pension § £179.60 £175.20

§ Applies to those reaching state retirement age after 5 April 2016.

Annual Investment Limits

  2021/22 2020/21
Individual Savings Account (ISA)    
- Overall limit £20,000 £20,000
- Lifetime ISA £4,000 £4,000
Junior ISA £9,000 £9,000
EIS - 30% relief £2,000,000 £2,000,000
Seed EIS (SEIS) - 50% relief £100,000 £100,000
Venture Capital Trust (VCT) - 30% relief £200,000 £200,000

National Insurance Contributions

Class 1 (employees) Employee Employer
Main NIC rate 12.0% 13.8%
No NIC on first £184pw £170pw
Main rate* charged up to £967pw no limit
2% rate on earnings above £967pw N/A
Employment allowance per business** N/A £4,000

* Nil rate of employer NIC for employees under the age of 21 and apprentices under 25, up to £967pw.

** Some businesses do not qualify, including some sole director companies and employers who have an employer's Class 1 NIC liability of £100,000 or more for 2020/21.

Employer contributions (at 13.8%) are also due on most taxable benefits (Class 1A) and on tax paid on an employee's behalf under a PAYE settlement agreement (Class 1B).

Class 2 (Self-employed)

Flat rate per week £3.05
Small profits threshold £6,515

Class 3 (Voluntary)

Class 3: Flat rate per week £15.40
Class 3A: Contributions vary with age  

Class 4 (Self-employed)

On profits £9,568 to £50,270 9%
On profits over £50,270 2%

Vehicle benefits

Cars

Taxable benefit: List price of car multiplied by chargeable percentage.

    2021/22 chargeable percentage for petrol cars first registered
CO2 g/km * Electric Range Miles Pre 6.04.2020 % Post 5.04.2020 %
0 N/A 1 1
1-50 >130 2 1
1-50 70-129 5 4
1-50 40-69 8 7
1-50 30-39 12 11
1-50 <30 14 13
51-54 N/A 15 14

Then a further 1% for each 5g/km CO2 emissions, up to a maximum of 37%.

Diesel cars that are not RDE2 standard suffer a 4% supplement on the above figures but are still capped at 37%.

Vans
Chargeable value of £3,500 (2020/21 £3,490) if private use is more than home-to-work. Zero-emission vans charged at £Nil (2020/21 £2,792).

Fuel
Employer provides fuel for private motoring in an employer-owned:
Car: CO2-based percentage from above table multiplied by £24,600 (2020/21 £24,500).
Van: £669 (2020/21 £666).

Employee contributions do not reduce taxable figure unless all private fuel is paid for by the employee (in which case there is no benefit charge).

Tax Free Mileage Allowances

Employee's own transport per business mile
Cars first 10,000 miles 45p
Cars over 10,000 miles 25p
Business Passengers 5p
Motorcycles 24p
Bicycles 20p

Capital Gains Tax

Annual exempt amount 2021/22 2020/21
Individuals, estates £12,300 £12,300
Most trusts 6,150 6,150

Tax rate

Individual (to basic rate limit)* 10% 10%
Individual (above basic rate limit)* 20% 20%
Trusts, estates* 20% 20%
Business Asset Disposal Relief (BADR)** 10% 10%
Investor' Relief (IR)*** 10% 10%

* Individuals are taxed at 18%/28% on gains on residential property and receipts of carried interest. Trusts and estates are taxed at 28% in these circumstances.

** BADR was called Entrepeneurs Relief prior to 6 April 2020. It is available for qualifying gains of up to £1m.

*** Shares in an unquoted trading company may be qualify on lifetime gains up to £10m. Various conditions apply.

Corporation Tax

Year to 31/03/2022 31/03/2021
Corporation tax rate 19% 19%
Research and development relief SME enhanced expenditure deduction scheme* 130% 130%
Large company R&D expenditure credit (RDEC) scheme** 13% 13%

* Additional deduction for qualifying R&D.

** Taxable expenditure credit for qualifying R&D.

SMEs that make losses can surrender the deduction to HMRC in exchange for a payment of 14.5% of the loss (capped at £20,000 plus 3 x PAYE & NIC for periods beginning from 1.4.21).

Main capital allowances

Plant and machinery allowances   Rate
Expenditure 1.4.21 - 31.3.23 (companies only)  
- Super deduction (main pool expenditure) 130%
- First-year allowance (special rate pool expenditure) 50%
Annual Investment Allowance (AIA)    
- expenditure 1.1.19 - 31.12.21 (companies only) £1,000,000 100%
- expenditure from 1.1.22 200,000 100%
New electric vans   100%
Writing down allowance: general pool (reducing balance)   18%
Writing down allowance: special rate pool (reducing balance)   6%

Motor cars purchased

  From 1.4.21
CO2 (g/km)
To 31.3.18
CO2 (g/km)
Allowance
New cars only Nil Up to 50 100%
In general pool Up to 50 Up to 110 18%
In special rate pool Above 50 Above 110 6%

* 8% pre 1.4.19 (companies) and pre 6.4.19 (businesses subject to income tax).

Structures and buildings allowance  
Fixed deduction per annum 3%

Property taxes

Annual Tax on Enveloped Dwellings (ATED)

ATED applies to 'high value' residential properties owned via a corporate structure, unless the property is used for a qualifying purpose.  The tax applies to properties valued at more than £500,000.

Property value Annual charge to
  31.3.2022 31.3.2021
£0.5m - £1m £3,700 £3,700
£1m - £2m £7,500 £7,500
£2m - £5m £25,300 £25,200
£5m - £10m £59,100 £58,850
£10m - £20m £118,600 £118,050
£20m + £237,400 £236,250

Stamp Duty Land Tax (SDLT) and Land and Buildings Transaction Tax (LBTT) and Land Transaction Tax (LTT) from 1 April 2021.

Residential property (1st property only)

SDLT - England & NI
£000 Rate
Up to 125* Nil
125 - 250 2%
250 - 925 5%
925 - 1,500 10%
Over 1,500 12%
LBTT - Scotland
£000 Rate
Up to 145 Nil
145 - 250 2%
250 - 325 5%
325 - 750 10%
Over 750 12%
LTT - Wales
£000 Rate
Up to 180** Nil
180 - 250 3.5%
250 - 400 5.0%
400 - 750 7.5%
750 - 1,500 10.0%
Over 1,500 12%

* Nil rate band up to 30.6.21 is £500,000 between 1.7.21 - 30.9.21 is £250,000.

** Nil rate band up to 30.6.21 is £250,000.

A supplement applies for all three taxes where an additional residential property is purchased for more than £40,000 (unless replacing a main residence)  It is also payable by all corporate purchasers. The rate is 3% (LBTT and LTT: 4%) of the total purchase price.

For SDLT:
- From 1.7.21, first-time buyers purchasing a property of up to £500,000 pay a nil rate on the first £300,000 of purchase price.

- A 2% supplement applies where the property is bought by a non-UK resident.

- A rate of 15% may apply to the total purchase price where the property is valued above £500,000 and purchased by a 'non-natural person' (e.g. a company).

For LBTT, first time buyers relief increases the nil rate band to £175,000.

Non residential or mixed use property

SDLT - England & NI
£000 Rate
Up to 150 Nil
150 - 250 2%
Over 250 5%
LBTT - Scotland
£000 Rate on band
Up to 150 Nil
150 - 250 1%
Over 250 5%
LTT - Wales
£000 Rate on band
Up to 225 Nil
225 - 250 1%
250 - 1000 5%
Over 1,000 6%

Value added tax

Standard rate (1/6 of VAT-inclusive price) 20%
Tourism and hospitality sector reduced rate  
- up to 30.9.21 5.0%
- from 1.10.21 to 31.3.22 12.5%
Registration level from 1.4.2017 £85,000 per annum
Deregistration level from 1.4.2017 £83,000 per annum

Flat rate scheme (FRS)

Annual taxable turnover to enter scheme Up to £150,000
Must leave scheme if annual taxable turnover Exceeds £230,000

If using FRS, the VAT paid by the business is a fixed percentage (based on business category) of "FRS Turnover" rather than the net of output tax over input tax. Input tax is usually not recoverable.

Cash accounting and annual accounting schemes

Annual taxable turnover to enter scheme Up to £1.35m
Must leave scheme if annual taxable turnover Exceeds £1.60m

Inheritance Tax

  2021/22 2020/21
Nil rate band (NRB)* £325,000 £325,000
NRB Residential Enhancement (RNRB) †* £175,000 £175,000
Tax rate on death** 40% 40%
Tax rate on lifetime transfers to most trusts 20% 20%

* Up to 100% of the proportion of a deceased spouse's/civil partner's unused NRB and RNRB band may be claimed to increment the current NRB and RNRB when the survivor dies.

† RNRB is available for transfers of a main residence to (broadly) direct descendents. It tapers away at the rate of £1 for every £2 of estate value above £2m.

** Rate reduced to 36% if at least 10% of the relevant estate is left to charity. Unlimited exemption for transfers between spouses/civil partners, except if UK domiciled transferor and foreign domiciled transferee, where maximum exemption £325,000.

Unlimited excemption for transfers between spouses/civil partners, except if UK domiciled transferor and foreign domiciled transferee, where maximum exemption £325,000.

100% Business Property Relief (BPR) for all shareholdings in qualifying unquoted trading companies, qualifying incorporated trading businesses and certain farmland/buildings.

Reduced tax charge on gifts within 7 years before death

Years before death 0 - 3 3 - 4 4 - 5 5 - 6 6 - 7
% of full death tax charge payable 100 80 60 40 20

Annual exemptions for lifetime gifts include £3,000 per donor and £250 per recipient.

Key dates and deadlines

Payment dates

Self assessment 2021/22 2020/21
1st payment on account 31 January 2022 2021
2nd payment on account 31 July 2022 2021
Balancing payment 31 January 2023 2022
Capital gains tax* 31 January 2023 2022

* UK residential property: CGT due within 30 days of completion.

Other payment dates

Class 1A NIC 19 July 2022 2021
Class 1B NIC 19 October 2022 2021

Corporation tax is due 9 months and 1 day from the end of the accounting period, unless a 'large' company paying by quarterly instalments.

2020/21 Filing deadlines

Issue P60s to employees 31 May 2021
P11D, P11d)b) 6 July 2021
Self assessment tax return (SATR) paper version 31 October 2021
Online SATR if outstanding tax to be included in 2022/23 PAYE code (if under £3000) 30 December 2021
Online SATR 31 January 2022

Non-resident CGT return is due within 30 days of completion of sale of UK land and buildings by a non-resident.

Useful rates

National Minimum Wage From From
Rates per hour 1.04.21 1.04.20
Aged 23 and over (National Living Wage) £8.91 £8.72
Aged 23 - 24 N/A £8.20
Aged 21 -22 £8.36 £8.20
Aged 18 -20 £6.56 £6.45
Aged 16 -17 £4.62 £4.55
Apprentices £4.30 £4.15

You are advised to consult us before acting on any information contained herein.

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