Budget Announcement Four

Mon, 03/08/2021 - 10:24 | dawn@therealbu…

Income tax thresholds are frozen until 2026

Rates & allowances

The tax-free personal allowance throughout the UK will increase to £12,570 for the 2021/22 tax year.

The basic-rate band (20%) will rise to £37,700, 

The higher-rate threshold will rise to £50,270. Income above this threshold is taxed at 40%.

The additional-rate band will remain at £150,000, and income above this threshold is taxed at 45%

All of these thresholds will remain unchanged until 2025/26.

National living wage

The national living wage now applicable to the over-23s increases by 2.2% from £8.72 an hour to £8.91 an hour from April 2021.

National Insurance contributions

The employee’s Class 1 nil band will increase from £9,500 to £9,568 for the 2021/22 tax year - above this figure; National Insurance is paid at 12.5%.

From April 2021, the upper earnings limit will increase from £50,000 to £50,270 -income above this figure will pay a lower rate of 2% payments of National Insurance.

Self-employed 

Class 2 NICs rate for the self-employed will remain at £3.05 a week for 2021/22.

The self-employed small profits threshold will rise to £6,515 - there is no requirement to pay National Insurance up to this figure. 

The Class 4 National Insurance paid by the self-employed nil threshold will increase from £9,500 to £9,568 – in excess of this figure, 9% of profit is payable for the 2021/22 tax year. At £50,271, it drops to 2%.