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Tax Rates and Allowances 2021/2022

27 - 04 - 2021

Income Tax Rates

 

What is changing. 

 

The new Income Tax year starts on 06 April 2021. Employers will need to use new PAYE Calculators and Tax Tables from 06 April 2021 to reflect the changes in Income Tax rates, National Insurance percentages and bandwidths.

Income Tax 2021/22 Rest of the UK (including Scottish saving and dividend income) from 06.04.21

Rate	%	Bandwidth per annum
Basic	20%	£12,570 to £50,270
Higher	40%	£50,271 to £150,000
Additional	45%	£150,001 and above

Income Tax 2021/22 for Scotland for non-savings and non-dividend income from 06.04.2021

Rate	%	Bandwidth per annum
Starter	19%	£12,570 to £14,667
Scottish Basic	20%	£14,668 to £25,296
Scottish Intermediate	21%	£25,296 to £43,662
Scottish Higher	41%	£43,662 to £150,000
Scottish Additional	46%	£150,000 and above

Income Tax 2021/22 for Wales from 06.04.21

Rate	%	Bandwidth per annum
Basic	20%	£12,570 to £50,270
Higher	40%	£50,271 to £150,000
Additional	45%	£150,001 and above

 

 

Your company as an employer must apply the new rates as of 06 April 2021.

What do I need to know?

The key points are:

Income Tax 2021/22 Rest of the UK (including Scottish saving and dividend income) from 06.04.21

Rate	%	Bandwidth per annum
Basic	20%	£12,570 to £50,270
Higher	40%	£50,271 to £150,000
Additional	45%	£150,001 and above

Income Tax 2021/22 for Scotland for non-savings and non-dividend income from 06.04.2021

Rate	%	Bandwidth per annum
Starter	19%	£12,570 to £14,667
Scottish Basic	20%	£14,668 to £25,296
Scottish Intermediate	21%	£25,296 to £43,662
Scottish Higher	41%	£43,662 to £150,000
Scottish Additional	46%	£150,000 and above

Income Tax 2021/22 for Wales from 06.04.21

Rate	%	Bandwidth per annum
Basic	20%	£12,570 to £50,270
Higher	40%	£50,271 to £150,000
Additional	45%	£150,001 and above

Class 1 National Insurance

Rate	%	Bandwidth per week
Employees	0%	£120 to £184.00
Employees	12%	£184.01 to £967.00
Employees	2%	£967.01 and above
Employers	13.8%	£170.01 and above

 

What is the new personal tax allowance for 2019/20?

The Income Tax Personal Allowance for 2021/22 is £12,570.

Anyone earning more than £100,000 will see their Personal Allowance reduced by £1 for every £2 earned over £100,000.

What do I need to do?

Nothing, if you have instructed Foremans LLP to administer the payroll on behalf of your business, we will apply the new rates to the calculations on your behalf and amend your weekly salary to our advised level of £183 per week in order to minimise your tax liability whilst qualifying as making NI contributions.

If Foremans LLP does not process the payroll for your business you will need to apply the new rates as at 06 April 2021.

If you would like to discuss any of the issues noted above please contact us on:

 

01244 625 500 or 01978 364 000

contactus@foremansllp.com

 

Whilst all due care and attention has been taken in the preparation of these notes no liability can be accepted for any omission or item contained therein.

 

Foremans LLP

March 2021

  

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Fixed Data

Assumptions

General                                                                                                                              

• The user is over 21 and subject to tax in the UK
• The user wishes to minimise their tax liability
• The user is subject to national insurance i.e.he/she is not over retirement age
• Only current tax rates and limits are applied
• No tax mitigation payments are made e.g. pension contributions
• Only 3 digit letter 'L' tax codes shown in the drop down list can be entered 
• The user does not have a turnover greater than £100,000 where fewer reliefs and or higher taxes may apply

Expenses

• All miles claimed as expenses are for business use using a personally owned car or van
• All other expenses claimed are wholly, necessarily and where appropriate exclusively for the benefit of the business

Foremans LLP Charges

• Foremans fees associated with Limited Company, Sole Trader or Umbrella are as per published rates
• Foremans current Service Costs are allowed for in all calculations.

Holiday Pay

• Holiday pay is accumulated week by week by Umbrella or Agency employer but paid out during the year

VAT

• Limited Company or Sole Trader will be VAT registered
• Limited Company or Sole Trader will take advantage of Flat rate VAT
• Flat rate applied includes the benefit of the additional 1% applicable to the first year of VAT registration

Limited Company Conditions

• One director / one shareholder in a Personal Service Company
• Director of Personal Service Company elects to vote for 100% dividend after salary, costs and expenses
• Director's salary is maximum salary to the primary threshold for NI
• The Limited Company is trading normally i.e it is not subject to IR35 and is not a Managed Service Company

NOTES

• The Current tax rates are taken from the Fixed Data Table
• The current Value Added Tax Rate is 20% and is applied to all invoices and expenses as appropriate
• The Director's Salary is fixed in relation to National Insurance thresholds. Higher Rate Taxpayers should consider the advantages and disadvantages of a larger annual salary or bonus
• Higher Rate Taxpayers may wish to consider the advantages and disadvantages of shared ownership of their business
• Users with a tax code other than three digits and letter "L" may telephone or email our Development Department to request a detailed calculation
• Generally the use of an Umbrella rather than an Agency payroll is only efficient if sufficient weekly expenses are allowable and claimed
• The expenses claimed under an Umbrella should not prevent the proper operation of National Minimum Wage