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Budget 2021: Income Tax and Personal Savings
On 3 March, Chancellor Rishi Sunak delivered the 2021 Budget. Here we have provided a summary of the Income Tax rates and allowances that were announced.
Income Tax Rates and Bands
|
2021/22 |
|
| Band £ | Rate % |
|
0 – 37,700 |
20 |
|
37,701 – 150,000 |
40 |
| Over 150,000 |
45 |
|
2020/21 |
|
| Band £ |
Rate % |
|
0 – 37,700 |
20 |
| 37,701 – 150,000 |
40 |
| Over 150,000 |
45 |
Income Tax rates in Scotland and Wales on income other than savings and dividend income have been devolved.
Savings Income
|
|
2021/22
|
2020/21
|
| Savings allowance basic rate | £1,000 |
£1,000 |
| Savings allowance higher rate | £500 |
£500 |
A starting rate for savings band of £5,000 at 0% may be available unless taxable non-savings income exceeds the starting rate band.
Dividend Income
|
|
2021/22 |
2020/21 |
|
Dividend allowance |
£2,000 |
£2,000 |
|
Dividend ordinary rate |
7.5% |
7.5% |
| Dividend upper rate | 32.5% |
32.5% |
| Dividend additional rate | 38.1% |
38.1% |
Personal Allowances
|
2021/22 |
2020/21 |
|
|
Personal allowance |
£12,570 |
£12,500 |
|
Personal allowance income limit |
£100,000 |
£100,000 |
|
Marriage allowance Transferable between certain spouses where neither pay tax above the basic rate |
£1,260 |
£1,250 |
|
Married couple’s allowance (relief given at 10%) Either partner born before 6 April 1935 −minimum amount −income limit |
£9,125
£3,530 £30,400 |
£9,075
£3,510 £30,200 |
|
Blind person’s allowance |
£2,520 |
£2,500 |
Scottish Income Tax Rates and Bands
Savings and dividend income are taxed using UK rates and bands.
|
2021/22 |
|
|
Band £ |
Rate % |
|
0 – 2,097 |
19 |
|
2,098 – 12,726 |
20 |
| 12,727 – 31,092 |
21 |
|
31,093 – 150,000 |
41 |
| Over £150,000 |
46 |
|
2020/21 |
|
|
Band £ |
Rate % |
|
0 – 2,085 |
19 |
|
2,086 – 12,658 |
20 |
|
12,659 – 30,930 |
21 |
| 30,931 – 150,000 | 41 |
| Over £150,000 |
46 |
Welsh Income Tax Rates
Although Income Tax for Wales has been devolved, Welsh resident taxpayers continue to pay the same overall rates as taxpayers in England and Northern Ireland.
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