The current tax rates, Allowances and figures 2021/22

We have complied a list of key individual and business tax rates and allowances currently set by the Government and will aim to keep this up to date. There are some new taxes and tax amendments listed below that reflect the focus on carbon neutral goals.

If you need any further clarification then you can call one of our consultants for free advice on 01923 901555.

Corporate Tax rates

The financial year runs from 1st April to 31st March.

2021/22 2022/23 2023/24
Main rate 19% 19% 25%
Small profit rates N/A N/A 19%
Lower threshold N/A N/A £50,000
Upper threshold N/A N/A £250,000

Corporation Tax on chargeable gains

If you sell or dispose of a business asset, you’ll need to pay Corporation Tax on any profits (or ‘chargeable gains’).

Capital Allowances

You can claim capital allowances when you buy assets you will be using in your business (known as plant and machinery): computers, cars, furniture, equipment, fixtures, machines and other equipment used for business purposes.

If you’re a sole trader or partner and have an income of £150,000 or less a year, you may be able to use a simpler system called cash basis instead.

Main rate (all profits except ring fence profits) Special rate for unit trusts and open-ended
investment companies
19% 20%

Business Cars

You can claim capital allowances on cars you buy and use in your business. This means you can deduct part of the value from your profits before you pay tax.

Cars do not qualify for annual investment allowance (AIA).

CO2 emissions g/km Electric mileage range NEDC % WLTP %
0 1 1
1-50 130 and above 2 1
1-50 70 to 129 5 4
1-50 40 to 69 8 7
1-50 30 to 39 12 11
1-50 less than 30 14 13
51-54 15 14
55-59 16 15
60-64 17 16
65-69 18 17
70-74 19 18
75-79 20 19
80-84 21 20
85-89 22 21
90-94 23 22
95-99 24 23
100-104 25 24
105-109 26 25
110-114 27 26
115-119 28 27
120-124 29 28
125-129 30 29
130-134 31 30
135-139 32 31
140-144 33 32
145-149 34 33
150-154 35 34
155-159 36 35
160-164 37 36
165-169 37 37
170 and above 37 37
CO2 emissions g/km Electric mileage range NEDC % WLTP %
0 0 0
1-50 130 and above 2 0
1-50 70 to 129 5 3
1-50 40 to 69 8 6
1-50 30 to 39 12 10
1-50 less than 30 14 12
51-54 15 13
55-59 16 14
60-64 17 15
65-69 18 16
70-74 19 17
75-79 20 18
80-84 21 19
85-89 22 20
90-94 23 21
95-99 24 22
100-104 25 23
105-109 26 24
110-114 27 25
115-119 28 26
120-124 29 27
125-129 30 28
130-134 31 29
135-139 32 30
140-144 33 31
145-149 34 32
150-154 35 33
155-159 36 34
160-164 37 35
165-169 37 36
170 and above 37 37
CO2 emissions g/km 2017/18 2018/19 2019/20
0 9% 13% 16%
1-50 9% 13% 16%
51-75 13% 16% 19%
76-94 17% 19% 22%
95 18% 20% 23%
100 19% 21% 24%
105 20% 22% 25%
110 21% 23% 26%
115 22% 24% 27%
120 23% 25% 28%
125 24% 26% 29%
130 25% 27% 30%
135 26% 28% 31%
140 27% 29% 32%
145 28% 30% 33%
150 29% 31% 34%
155 30% 32% 35%
160 31% 33% 36%
165 32% 34% 37%
170 33% 35% 37%
175 34% 36% 37%
180 35% 37% 37%
185 36% 37% 37%
190 37% 37% 37%
195 37% 37% 37%
200 37% 37% 37%
205 37% 37% 37%
210 37% 37% 37%
215 37% 37% 37%
220 and above 37% 37% 37%

The Capital Allowances Act 2001 amendment

The first-year allowance for cars with low carbon dioxide emissions has been extended a further four years to 31st March 2025.

Capital Gains Tax

Capital Gains Tax is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value and the tax is based on the profit you make.

Use these rates and allowances for Capital Gains Tax to work out your overall gains above your tax-free allowance (known as the Annual Exempt Amount).

You’ll get an annual tax-free allowance, known as the Annual Exempt Amount (AEA), if you’re liable to Capital Gains Tax every tax year unless you’re non-domiciled in the UK and have claimed the remittance basis of taxation on your foreign income and gains.

You only pay Capital Gains Tax if your overall gains for the tax year (after deducting any losses and applying any reliefs) are above the AEA.

Individuals Individuals Trust
Exemption £12,300 £6,150
Standard rate 10% 20%
Higher rate 20%
  • 10% and 20% tax rates for individuals (not including residential property and carried interest)
  • 18% and 28% tax rates for individuals for residential property and carried interest
  • 20% for trustees or for personal representatives of someone who has died (not including residential property)
  • 28% for trustees or for personal representatives of someone who has died for disposals of residential property
  • 10% for gains qualifying for Entrepreneurs’ Relief
  • 28% for Capital Gains Tax on property where the Annual Tax on Enveloped Dwellings is paid, AEA is not applicable
  • 20% for companies (non-resident Capital Gains Tax on the disposal of a UK residential property)

If you pay higher rate Income Tax

If you’re a higher or additional rate taxpayer you’ll pay:

  • 28% on your gains from residential property
  • 20% on your gains from other chargeable assets

VAT rates on different goods and services

Registered businesses charge VAT on goods and services sold and pay VAT on goods and services purchases. There are 3 different rates; standard, reduced and zero VAT depending on the business, see exemptions list.

Rate Conditions

These rates may only apply if certain conditions are met, or in particular circumstances, depending on some or all of the following:

  • who’s providing or buying them
  • where they’re provided
  • how they’re presented for sale
  • the precise nature of the goods or services
  • whether you obtain the necessary evidence
  • whether you keep the right records
  • whether they’re provided with other goods and services

These rates may only apply if certain conditions are met, or in particular circumstances, depending on some or all of the following:

Standard rate VAT 2021/22 currently 20%

Exemption rate VAT 2021/22 currently 5% (see exemption list)

The thresholds for registering for VAT or joining a VAT accounting scheme from 1 January 2021.

Circumstance Threshold
VAT registration More than £85,000
Registration for distance selling into Northern Ireland More than £70,000
Registration for bringing goods into Northern Ireland from the EU More than £85,000
Deregistration threshold Less than £83,000
Completing simplified EC Sales List £106,500 or less and supplies to EU countries of £11,000 or less

Income Tax bands of taxable income (£ per year)

The current tax year is from 6 April 2021 to 5 April 2022.

Band Taxable income Rate
Personal allowance up to £12, 570 0%
Basic rate £12,571 to £50,270 20%
Higher rate £50,271 to £150,000 40%
Additional rate Column 2over £150,000 Value 4 45%

You do not get a Personal Allowance on taxable income over £125,140.

The Personal Allowance goes down by £1 for every £2 of income above the £100,000 limit. It can go down to zero.

Blind person allowance: Minimum £3,350 – Maximum £9,125

Marriage allowance: £1,260

Married couple allowance: minimum £3,510 maximum £9,125

Dividend allowance: £2,000

Income Tax bands of taxable income (£ per year)

Tax year 2021/22 Tax year 2022/23 Tax year 2023/24 Tax year 2024/25 Tax year 2025 /26
Basic rate £1 to £37,700 £1 to £37,700 £1 to £37,700 £1 to £37,700 £1 to £37,700
Higher rate £37,701 to £150,000 £37,701 to £150,000 £37,701 to £150,000 £37,701 to £150,000 £37,701 to £150,000
Additional rate Over £150,000 Over £150,000 Over £150,000 Over £150,000 Over £150,000

National Insurance

Employee and employer Class 1 contributions rates and thresholds (£ per week)

Tax year 2020 to 2021 Tax year 2021 to 2022
Weekly Lower Earnings Limit (LEL) £120 £120
Weekly Primary Threshold (PT) £183 £184
Weekly Secondary Threshold (ST) £169 £170
Upper Earnings Limit (UEL) £962 £967
Upper Secondary Threshold for under 21s £962 £967
Apprentice Upper Secondary Threshold (AUST) for under 25s £962 £967
Employment Allowance (per employer) £4,000 per year £4,000 per year

Employee’s (primary) Class 1 contribution rates

Earnings band Tax year 2020 to 2021 Tax year 2021 to 2022 (unchanged)
Below Weekly Lower Earnings Limit (LEL) N/A N/A
Weekly Lower Earnings Limit (LEL) to Weekly Primary Threshold (PT) 0% 0%
Weekly Primary Threshold (PT) to Upper Earnings Limit (UEL) 12% 12%
Above Upper Earnings Limit (UEL) 2% 2%

Employer’s (secondary) Class 1 contribution rates

Lower Earnings Limit Primary Threshold (PT) Secondary Threshold (ST) Upper Earnings Limit (UEL)
£120 £184 £170 £967

Self-employed Class 2 contribution rates and thresholds (£ per week)

Tax year 2020/21 Tax year 2021/22
Small Profits Threshold (SPT) £6,475 £6,515

The Personal Allowance goes down by £1 for every £2 of income above the £100,000 limit. It can go down to zero.

Class 3 National Insurance (voluntary)

You can pay voluntary National Insurance to fill or avoid gaps in your record.

If you’re paying voluntary contributions for the previous 2 tax years (2020 to 2021 or 2019 to 2020), you’ll pay the original rates for those years.

For all other years you’ll pay the current rate (2021 to 2022).
Class 3 rate is £15.40 per week.

Class 4

Tax year 2020/21 Tax year 2021/22
Annual profits band NIC rate (per cent)  NIC rate (per cent) (unchanged)
Below Lower Profits Limit (LPL) 0% 0%
Lower Profits Limit (LPL) to Upper Profits Limit (UPL) 9% 9%
Above Upper Profits Limit (UPL) 2% 2%

Inheritance Tax

Threshold for Inheritance tax

  • Value of your estate is below £325,000
  • you leave everything above the £325,000 threshold to your spouse, civil partner, a charity or a community amateur sports club

If you give away your home to your children (including adopted, foster or stepchildren) or grandchildren your threshold can increase to £500,000. If you’re married or in a civil partnership and your estate is worth less than your threshold, any unused threshold can be added to your partner’s threshold when you die. This means their threshold can be as much as £1 million.

Stamp Duty

Current threshold

You must pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a certain price in England and Northern Ireland.

The current SDLT threshold for residential properties is £500,000 and non residential is £150,000. This changes on 1 July 2021.

Property purchases from 1 October 2021

The SDLT thresholds will be:

  • £125,000 for residential properties
  • £150,000 for non-residential land and properties

Tax credits, Child Benefit and Guardians Allowance

Tax year 2020/21 Tax year 2021/22
Basic element £1,995 £2,005
Couple and lone parent element £2,045 £2,060
30 hour element £825 £830
Disabled worker element £3,220 £3,240
Severe disability element £1,390 £1,400
Tax year 2020/21 Tax year 2021/22
Maximum eligible cost for one child £175 per week £175 per week
Maximum eligible cost for 2 or more children £300 per week £300 per week
Percentage of eligible costs covered 70% 70%
Tax year 2020/21 Tax year 2021/22
Family element £545 £545
Child element £2,830 £2,845
Disabled child element £3,415 £3,435
Severely disabled child element £1,385 £1,390

Plastic Packaging Tax

Rate from 1 April 2022

£200 per tonne for plastic packaging with less than 30% recycled plastic content.

There will be a de minimis threshold of 10 tonnes of plastic packaging per 12 months, though for the first year this will be calculated differently.

Landfill Tax rates for 2021 to 2022

Material sent to landfill Rate from 1 April 2020 Rate from 1 April 2021 Rate from 1 April 2022
Coverage England and Northern Ireland England and Northern Ireland England and Northern Ireland
Standard-rated (per tonne) £94.15 £96.70 £98.60
Lower rated (per tonne) £3.00 £3.10 £3.15

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