Income Tax

Allowances 2021/22– 2020/21
Personal Allowance (PA)* £12,570 £12,571
Marriage Allowance**£1,260 £1,250
Blind Person’s Allowance £2,520 £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*PA is withdrawn at £1 for every £2 by which ‘adjusted income’ exceeds £100,000.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 given 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 taxpayer.

***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
Rate differ for General/Savings/Dividend income G S D
Basic rate 20% 20% 7.50%
Higher rate 40% 40% 32.50%
Additional rate45% 45% 38.10%

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

To the extent that savings income falls in the first £5000 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 £2000 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 over £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 & £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 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 exceed £240,000.

State pension (per week) 2021/22– 2020/21
Old state pension
Single person£137.60 £134.25
Married couple £220.05 £214.70
New state pension* £179.60 £175.20
*Applies to those reaching state retirement age after 5 April 2016.
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 over £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 & £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 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 exceed £240,000.

State pension (per week) 2021/22– 2020/21
Old state pension
Single person£137.60 £134.25
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

Individual Savings Account (ISA) 2021/22 2020/21
-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% 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 aged under 21 and apprentices aged under 25, up to £967pw.

**Some businesses do not qualify, including certain 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 4 (Self-Employed)
On profits £9,568 – £50,270 9%
On profits over £50,270 2%

Vehicle Benefits

Cars

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

2021/22 percentage for petrol cars first registered

CO2 g/km Electric Range Miles– Pre 06.04.2020– Post 05.04.2020
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).

Feul

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 Allowance

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 2021/22 2020/21
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%
Investors’ 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.

**Lifetime limit for qualifying gains: BADR £1m; IR £10m.

Corporation Tax

Year to 31.3.2022- 31.3.2021
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 Allowance

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 £1,000,000 100%
-Expenditure 1.1.22 £200,000 100%
New zero – emission vans 100%
Writing down allowance: general pool (reducing balance) 18%
Writing down allowance: special rate pool (reducing balance) 6%
Motor cars From 1.4.21 Pre 1.4.21 Allowance
CO2 (g/km) CO2 (g/km)
New car or motor bike Nil up to 50 100%
In general pool up to 50 up to 110 18%
In special rate pool above 50 above 110 6%
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.

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
£5 – £10m £59,100 £58,850
£10m – £20m £118,600 £118,050
over £20m £237,400 £236,250

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

Residental Property (1st property only)
SDLT – England & N. Ireland LBTT – Scotland LTT – Wales
£££ Rate £££ Rate £££ Rate
Up to £125,000* Nil Up to £145,000* Nil Up to £180,000** Nil
£125,000 – £250 2% £145,000 – £250 2% £180,000 – £250 3.5%
£250,000 – £925 5% £250,000 – £325 5% £250,000 – £400 5.0%
£925 – £1,500m 10% £325,000 – £750 10% £400,000 – £750 7.5%
over £1,500,000 12% over £750,000 12% £750,000 – £1,500m 10.0%
over £1,500,000 12.5%

*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 interest 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.

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 the purchase price.

LBTT: First-time buyer relief increase the nil rate band to £175,000 from 1.4.21.

SDLT: 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).

Non-residential or mixed use property
SDLT – England & N. Ireland LBTT – Scotland LTT – Wales
£££ Rate £££ Rate £££ Rate
Up to £150,000* Nil Up to £150,000* Nil Up to £225,000* Nil
£150,000 – £250 2% £150,000 – £250 1% £2250,000 – £250 1%
Over £250,000 5% Over £250,000 5% £250,000 – £1,000m 5%
Over £1,000,000 6%

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.

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
£5 – £10m £59,100 £58,850
£10m – £20m £118,600 £118,050
over £20m £237,400 £236,250

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

Residental Property (1st property only)
SDLT – England & N. Ireland LBTT – Scotland LTT – Wales
£££ Rate £££ Rate £££ Rate
Up to £125,000* Nil Up to £145,000* Nil Up to £180,000** Nil
£125,000 – £250 2% £145,000 – £250 2% £180,000 – £250 3.5%
£250,000 – £925 5% £250,000 – £325 5% £250,000 – £400 5.0%
£925 – £1,500m 10% £325,000 – £750 10% £400,000 – £750 7.5%
over £1,500,000 12% over £750,000 12% £750,000 – £1,500m 10.0%
over £1,500,000 12.5%

*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 interest 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.

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 the purchase price.

LBTT: First-time buyer relief increase the nil rate band to £175,000 from 1.4.21.

SDLT: 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).

Non-residential or mixed use property
SDLT – England & N. Ireland LBTT – Scotland LTT – Wales
£££ Rate £££ Rate £££ Rate
Up to £150,000* Nil Up to £150,000* Nil Up to £225,000* Nil
£150,000 – £250 2% £150,000 – £250 1% £2250,000 – £250 1%
Over £250,000 5% Over £250,000 5% £250,000 – £1,000m 5%
Over £1,000,000 6%

Value Added Taxes

Standard rate (1/6 of VAT – inclusive price) 20.0%
Tourism and Hospitality sector up to 30.9.21 5.0%
Tourism and Hospitality sector 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

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 descendants. 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.

100% Business Property Relief for shareholdings in qualifying unquoted trading companies, qualifying unincorporated 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%

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

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 (up to £3,000) to be included in 2022/23 PAYE code 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.

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

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