17th June 2021

The new Tax and National Insurance thresholds for the 2021/2022 tax year have been announced, including rates for England and Northern Ireland, Scotland, and Wales.

National Insurance contributions 2021/22

Rates and limits for Class 1 contributions were announced in November 2020. The following rates and limits will apply from 6 April 2021.

Rates and limits for NIC:

 2020/212021/22
Lower earnings limit£120£120
NI Threshold – Primary£184£183
NI Threshold – Secondary£170£169
Upper Earnings Limit£967£962
Primary main rate12%12%
Primary residual rate2%2%
Secondary rate13.8%13.8%
Secondary rate – workers under 210%0%
Secondary rate – Apprentices under 250%0%
Upper secondary threshold (under 21’s)£967£962
Upper secondary threshold (Apprentice rate)£967£962

England and Northern Ireland tax rates and bands for 2021/22

The level of allowances and tax rates were set out in Autumn 2020. The personal allowance and basic rate band have both been increased by CPI inflation in September 2020 (0.5%). These amounts are frozen for the next four years – until April 2026.

Rates and limits for tax:

 2020/212021/22
Personal allowance£12,500£12,570
Income limit for personal allowance£100,000£100,000
Basic rate band (20%)£37,500£37,700
Higher rate limit (40%)£150,000£150,000
Additional rate45%45%

Scottish tax rates and bands for 2021/22

On 25 February 2021, the Scottish Parliament set the following Income Tax rates and bands for 2021 to 2022, which took effect from 6 April 2021.

The UK Government confirmed at its Budget on 3 March 2021 that the UK-wide Personal Allowance will increase to £12,570 in 2021 to 2022.

BandsBand nameRate
Over £12,570* – £14,667Starter Rate19%
Over £14,667 – £25,296Scottish Basic Rate20%
Over £25,296 – £43,662Intermediate Rate21%
Over £43,662 – £150,000**Higher Rate41%
Over £150,000**Top Rate46%

* assumes individuals are in receipt of the Standard Personal Allowance.

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

Scottish taxpayers have a prefix ‘S’ on their PAYE code. The determining factor is where the taxpayer lives (rather than works). It is important that employees keep their address details up to date to ensure that they are allocated the correct tax code. If employees have enrolled for a personal tax account (PTA), they can change their details online.

Welsh tax rates and bands for 2021/22

For the 2021/22 tax year, the rates for Wales are the same as England and Northern Ireland.

Welsh tax status is determined in the same way as Scottish tax status – it is where the individual normally lives. Welsh tax codes have a prefix C.

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