Tax thresholds and tax allowances for tax year 2021/2022

Summary of changes to rates, thresholds and allowances for tax year commencing 6th April 2021.

Income Tax rates

Item

2020/21

2021/22

What does this mean?

Personal Allowance

£12,500

£12,570

An employee can earn £12,570 per year before paying any tax at all if they are on the standard 1257L tax code for the next year, that's £242 per week or £1,048 per month

Basic rate (20%)

£12,500 to £50,000

£12,570 to £50,270

The next £37,700 of earnings on top of the personal allowance will be taxed at the basic rate of 20%

Higher rate (40%)

£50,001 to £150,000

£50,271 to £150,000

Earnings in excess of the personal allowance and basic rate band will be taxed at the higher rate of 40%

Additional rate

45%

45%

Any earnings over £150,000 are taxed at 45%

National Insurance rates

Item

2020/21

2021/22

What does that mean?

Primary Threshold (PT)

£183

£184

Employees can earn £184 per week before paying Employee's National Insurance at 12%

Secondary Threshold (ST)

£169

£170

Employees can earn £170 per week before Parasol pay Employer's National Insurance at 13.8%

Upper Earnings Limit (UEL)

£962

£967

Any weekly earnings above £967 are subject to employee National Insurance contributions at the lower rate of 2%

If you have any questions, call our Employee Support Team on 01925 644 860.