With effect from 6 April 2021 there has been an increase in some of the National Insurance and Income Tax thresholds.
The following Income Tax and National Insurance thresholds and rates will apply from 6 April 2021 to 5 April 2022:-
Income Tax Thresholds & Rates
England and Northern Ireland:-
| PAYE Tax Rates and Thresholds | 2021-2022 |
|---|---|
| Employee personal allowance | £242 per week £1,048 per month £12,570 per year |
| English and Northern Irish basic tax rate | 20% on annual earnings above the PAYE tax threshold and up to £37,700 |
| English and Northern Irish higher tax rate | 40% on annual earnings from £37,701 to £150,000 |
| English and Northern Irish additional tax rate | 45% on annual earnings above £150,000 |
Scotland:-
| PAYE Tax Rates and Thresholds | 2021-2022 |
|---|---|
| Employee personal allowance | £242 per week £1,048 per month £12,570 per year |
| Scottish starter tax rate | 19% on annual earnings above the PAYE tax threshold and up to £2,097 |
| Scottish basic tax rate | 20% on annual earnings from £2,098 to £12,726 |
| Scottish intermediate tax rate | 21% on annual earnings from £12,727 to £31,092 |
| Scottish higher tax rate | 41% on annual earnings from £31,093 to £150,000 |
| Scottish top tax rate | 46% on annual earnings above £150,000 |
Wales:-
| PAYE Tax Rates and Thresholds | 2021-2022 |
|---|---|
| Employee personal allowance | £242 per week £1,048 per month £12,570 per year |
| Welsh basic tax rate | 20% on annual earnings above the PAYE tax threshold and up to £37,700 |
| Welsh higher tax rate | 40% on annual earnings from £37,701 to £150,000 |
| Welsh additional tax rate | 45% on annual earnings above £150,000 |
Class 1 NIC Thresholds 2021-2022
| Class 1 National Insurance thresholds | per week | per month | per year |
|---|---|---|---|
| LEL | £120 | £520 | £6,240 |
| Primary Threshold (PT) | £184 | £797 | £9,568 |
| Secondary Threshold (ST) | £170 | £737 | £8,840 |
| Upper Secondary Threshold (under 21) (UST) | £967 | £4,189 | £50,270 |
| Apprentice Upper Secondary Threshold (apprentice under 25) (AUST) | £967 | £4,189 | £50,270 |
| Upper Earnings Limit (UEL) | £967 | £4,189 | £50,270 |
Note, Employees pay National Insurance Contributions on earnings above the Primary Threshold. Employers pay National Insurance Contributions on salary payments above the Secondary Threshold.
Dividend Tax Rates 2021-2022
There is no change to dividend tax rates in the 2020 – 2021 tax year:-
- The tax-free dividend allowance remains at £2,000.
- Basic-rate taxpayers pay 7.5% on dividends.
- Higher-rate taxpayers pay 32.5% on dividends.
- Additional-rate taxpayers pay 38.1% on dividends.
Business Mileage Allowances
There has been no change to HMRC’s approved mileage allowance payments which remain as follows:-
| First 10,000 Miles | Over 10,000 Miles | |
| Car / Van | £0.45 | £0.25 |
| Motorcycle | £0.24 | £0.24 |
| Bicycle | £0.20 | £0.20 |
You can download our handy Excel spreadsheet to keep a record of your business mileage by clicking on the download button below.
