In his 2021 Budget, Rishi Sunak, Chancellor of the Exchequer, announced a freeze of many tax rates and allowances. A summary of the key rates and how they compare to the 2021/22 tax year are shown below. He also announced that from April 2022 the rate of National Insurance Contributions you pay will increase by 1.25%. This is to be spent on the NHS and social care.
Income Tax Allowances
¹ Available for civil partners.
Income Tax Rates
A 0% starting rate for savings income only applies to the extent that such income falls within the first £5,000 of taxable income. If taxable non-savings income exceeds the limit, the starting rate does not apply. A 0% rate applies to savings income falling within the personal savings allowance. Income taxable at the starting rate for savings does not fall within the personal savings allowance.
A 0% rate applies to dividend income with the dividend allowance.
Trusts
The 2022/23 trust rate of income tax is 45%, with the dividend trust rate being 39.35%. In the 2021/22 tax year these rates were 45% and 38.1% respectively.
National Insurance Contributions
Employees’ rates are reduced to 7.1% for married women with valid certificates of election but the 3.25% rate above £967 still applies. Rates are nil for employees over state pensionable age. Normal employers’’ contributions are still payable. Employers’ rates for employees under 21 and apprentices under 25 are nil on earnings up to £967 per week.
Employment allowance
(per employer) - £4,000 a year. Available only when the employer’s NIC liability for the previous tax year was less than £100,000.
Inheritance Tax
¹ Unused nil-rate band is transferable to spouse or civil partner. ² 36% where 10% or more of the net estate is left to charity.
Capital Gains Tax
¹ Subject to lifetime limit on gains of £1 million. ² Subject to lifetime limit on gains of £10 million.
Individual Savings Accounts
Registered Pension Schemes
Individual contributions
Maximum tax-relievable contributions are the higher of:
· 100% of taxable UK earnings; or
· £3,600 (where the scheme applies tax relief at source).
Any unused annual allowance can be carried forward for up to three years.
If you have any questions relating to the tax rates which are likely to affect your personal or business circumstances, or perhaps a trust that you are involved with, do not hesitate to get in touch. Simply call 0116 216 7681 or email hello@finchtax.com.
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