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.

How can we help?

If you need financial planning assistance, we can help to ensure that your plans remain effective, even as your business and personal circumstances change.

We will work alongside you to help you achieve a rewarding and financially secure future. Please contact us to arrange an initial discussion.

Please wait...