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UK Tax & Allowances

Author Image The Technical Team
7 minutes read
Last updated on 6th Apr 2022

Income Tax (non Scottish)

Tax/Allowance 2020/21 2021/22 2022/23 Further information
Basic rate income tax band (20%) £0 - £37,500 £0 - £37,700 £0 - £37,700 Read more about income tax
Higher rate income tax band (40%) £37,501 - £150,000 £37,701 - £150,000 £37,701 - £150,000
Additional rate income tax band (45%) £150,000+ £150,000+ £150,000+

Scottish income tax

Tax/Allowance 2020/21 2021/22 2022/23 Further information
Starter rate income tax (19%) £0 - £2,085 £0 - £2,097 £0 - £2,162 Read more about Scottish tax rates
Basic rate income tax (20%) £2,086 - £12,658 £2,098 - £12,726 £2,163 - £13,118
Intermediate rate income tax (21%) £12,659 - £30,930 £12,727 - £31,092 £13,119 – £31,092
Higher rate income tax (40%)
 n/a
 n/a n/a
Higher rate income tax (41%) £30,931 - £150,000 £31,093 - £150,000 £31,093 - £150,000
Additional rate income tax band (45%)
 n/a
 n/a n/a
Top rate income tax band (46%) £150,000 + £150,000+ £150,000+

Tax on savings

Tax/Allowance 2020/21 2021/22 2022/23 Further Information 
Starting rate of tax on savings income 0% 0% 0% Read more about income tax
Basic rate of tax on savings income 20% 20% 20%
Higher rate of tax on savings income 40% 40% 40%
Additional rate of tax on savings income 45% 45% 45%

Personal Savings Allowance

Tax/Allowance 2020/21 2021/22 2022/23 Further information
Basis rate tax payers £1,000 £1,000 £1,000

 

Read more about Personal  Savings Allowance
Higher rate tax payers £500 £500 £500
Additional rate tax payers £0 £0 £0

Personal Allowance

Tax/Allowance 2020/21 2021/22 2022/23 Further information
Personal allowance £12,500 £12,570 £12,570 Read more on personal allowances
Blind persons allowance £2,500 £2,520 £2,600

Dividend tax allowance

Tax/Allowance 2020/21 2021/22 2022/23 Further information
Dividend allowance  £2,000 £2,000 £2,000 Read more about tax on dividends
Dividend ordinary rate - for dividends otherwise taxable at the basic rate. 7.5% 7.5% 8.75%
Dividend upper rate - for dividends otherwise taxable at the higher rate. 32.5% 32.5% 33.75%
Dividend additional rate - for dividends otherwise taxable at the additional rate. 38.1% 38.1% 39.35%

Special rates of income tax for trustees (discretionary trusts and interest in possession trusts)

Tax/Allowance 2020/21 2021/22 2022/23 Further information
Discretionary trusts   Read more about special rates of income tax
UK investment bonds Gains above 1,000 taxed at 25%
 Gains above 1,000 taxed at 25% Gains above 1,000 taxed at 25%
Offshore investment bonds Gains above £1,000 taxed at 45%
 Gains above £1,000 taxed at 45% Gains above £1,000 taxed at 45%
Unit trusts & OEICs Dividends taxed at 7.5% and interest taxed at 20%. For income above £1,000, dividends are taxed at 38.1% and interest 45%
 Dividends taxed at 7.5% and interest taxed at 20%. For income above £1,000, dividends are taxed at 38.1% and interest 45% Dividends taxed at 8.75% and interest taxed at 20%. For income above £1,000, dividends are taxed at 39.35% and interest 45%
Interest in Possession Trusts  
UK investment bonds In tax years post death, UK trustees are taxed at 25%
 In tax years post death, UK trustees are taxed at 25% In tax years post death, UK trustees are taxed at 25%
Offshore investment bonds In tax years post death, UK trustees are taxed at 45%
 In tax years post death, UK trustees are taxed at 45% In tax years post death, UK trustees are taxed at 45%
Unit trusts and OEICs Trustees are taxed at 20% on interest and 7.5% on dividends
 Trustees are taxed at 20% on interest and 7.5% on dividends Trustees are taxed at 20% on interest and 8.75% on dividends

Marriage Allowance & Married Couples Allowance

Tax/Allowance 2020/21 2021/22 2022/23 Further information
Marriage Allowance £1,250 £1,260 £1,260 Read more about Marriage Allowance
Marriage Couple's Allowance for those born before 6 April 1935 £9,075(max)
£3,510(min)		 £9,125 (max)
£3,53
0 (min)		 £9,415 (max)
£3,640 (min)
Income limit for Married Couple's Allowance £30,200 £30,400 £31,400

National Insurance

Tax/Allowance 2020/21 2021/22 2022/23 Further information
Class 1 NICs: Employee and employer thresholds and allowance
(£ per week - except where stated)		   Read more about National Insurance
Lower Earnings Limit £120 £120 £123
Primary Threshold £183 £184 £229*
Secondary Threshold £169 £170 £175
Upper Earnings Limit £962 £967 £967
Upper Secondary Threshold for under 21s £962 £967 £967
Apprentice Upper Secondary Threshold for under 25s £962 £967 £967
Employment Allowance (per employer) £4,000 per year £4,000 per year £5,000 per year

*Employee National Insurance is using the “Effective Annual threshold” of £11,908 which refers to the Primary Threshold level if the weekly level was applied for a full year. This is based on the Primary Threshold being £9,880 from 6 April 2022 until 5 July 2022, and then £12,570 from 6 July 2022 until 5 April 2023

Class 1 NICs: Employee NIC rates
(£ per week - except where stated)
Below Weekly Lower Earnings Limit
 0% 0% 0%
Weekly Lower Earnings Limit to Primary Threshold 0% 0% 0%
Primary Threshold to Upper Earnings Limit 12% 12% 13.25%
Above Upper Earnings Limit 2% 2% 3.25%
Married woman’s reduced rate for (primary) Class 1 contribution rates
  
Weekly earnings from between the Primary Threshold and Upper Earnings Limit
 5.85% 5.85% 7.1%
Weekly earnings above the Upper Earnings Limit
 2% 2% 3.25%
Class 1 NICs: Employer NIC rates
(£ per week - except where stated)		  
Employer’s (secondary) Class 1 contribution rates  
Below the Secondary Threshold 0% 0% 0%
Above the Secondary Threshold 13.8% 13.8% 15.05%
Employer’s (secondary) Class 1 contribution rates for employees under 21  
Below the Upper Secondary Threshold 0% 0% 0%
Above Upper Secondary Threshold 13.8% 13.8% 15.05%
Employer’s (secondary) Class 1 contribution rates for Apprentices under 25  
Below the Upper Secondary Threshold 0% 0% 0%
Above Upper Secondary Threshold 13.8% 13.8% 15.05%
Class 2 NICs: Self-employed rates and thresholds
(£ per week - except where stated)		  
Small Profits Threshold £6,475 per year £6,515 per year £6,725 per year
Above the Small Profits Threshold £3.05 £3.05 £3.15
Class 3 NICs: Other rates and thresholds
(£ per week)
  
Voluntary contributions
 £15.30 £15.40 £15.85
Class 4 NICs: Self-employed rates and thresholds
(£ per year)
  
Lower Profits Limit £9,500 £9,568 £9,880
Upper Profits Limit £50,000 £50,270 £50,270
Class 4 contribution rates
  
Below the Lower Profits Limit 0% 0% 0%
Between the Lower Profits Limit  and Upper Profits Limit 9% 9% 10.25%
Above the Upper Profits Limit
 2% 2% 3.25%

Working and Child Tax Credits, Child Benefit and Guardians Allowance

Tax/Allowance 2020/21 2021/22  Further information
Working tax credits (per year)
   Read more about child benefit and guardians allowance
Basic element £1,995 £2,005 Announced Nov 2021
Couple and lone parent element
 £2,045 £2,060 Announced Nov 2021
30 hour element £825 £830 Announced Nov 2021
Disabled worker element £3,220 £3,240 Announced Nov 2021
Severe disability element £1,390 £1,400 Announced Nov 2021
Childcare element of the working tax credit (per week)  
Maximum eligible cost for one child £175 £175 Announced Nov 2021
Maximum eligible cost for two or more children £300 £300 Announced Nov 2021
Percentage of eligible costs covered 70% 70% Announced Nov 2021
Child tax credit (per year)  
Family element £545 £545 Announced Nov 2021
Child element £2,830 £2,845 Announced Nov 2021
Disabled child element £3,415 £3,435 Announced Nov 2021
Severely disabled child element £4,800 £4,825 Announced Nov 2021
Child benefit (per week)  
Eldest/only child £21.05 £21.15 Announced Nov 2021
Other children £13.95 £14.00 Announced Nov 2021
Guardian's allowance £17.90 £18.00 Announced Nov 2021

Capital, assets and property

Tax/Allowance 2020/21 2021/22 2022/23 Further information
Pensions allowances   Read more about pensions allowances
Lifetime Allowance limit £1,073,100 £1,073,100 £1,073,100
Annual Allowance limit £40,000 £40,000 £40,000
Tapered Annual Allowance From £4,000 to £40,000 From £4,000 to £40,000 From £4,000 to £40,000
Money Purchase Annual Allowance  £4,000 £4,000 £4,000
Tax free savings accounts   Read more about Tax free savings accounts
Individual Savings Account (ISA) subscription limit

£20,000*

*Of which £4,000 may be saved into a Lifetime ISA 

£20,000*

*Of which £4,000 may be saved into a Lifetime ISA

£20,000*

*Of which £4,000 may be saved into a Lifetime ISA
Junior ISA subscription limit £9,000 £9,000 £9,000
Child Trust Fund (CTF) subscription limit £9,000 £9,000 £9,000
Insurance Premium Tax    
Standard rate 12% 12% 12%
Higher rate 20% 20% 20%
Capital Gains Tax   Read more about Capital Gains Tax
Main rates for individuals 10% / 20% 10% / 20% 10% / 20%
Rates for individuals (for gains on residential property not eligible for Private Residence Relief, and carried interest) 18% / 28% 18% / 28% 18% / 28%
Main rate for trustees and personal representatives 20% 20% 20%
Rate for trustees and personal representatives (for gains on residential property not eligible for Private Residence Relief) 28% 28% 28%
Annual Exempt Amount (AEA) for individuals and personal representatives £12,300 £12,300 £12,300
AEA for most trustees £6,150 £6,150 £6,150
Rate on gains subject to entrepreneurs’ relief 10% 10% 10%
Rate on gains subject to investors’ relief 10% 10% 10%

Business Asset Disposal Relief (formerly Entrepreneurs’ relief): lifetime limit on gains for entrepreneurs

 £10,000,000 £1,000,000 £1,000,000
Investors’ relief: lifetime limit on gains for external investors  £10,000,000 £10,000,000 £10,000,000
Inheritance tax   Read more about Inheritance tax
Rate (for estates) 40% 40% 40%
Reduced rate (for estates leaving 10% or more to charity) 36% 36% 36%
Rate (for chargeable lifetime transfers) 20% 20% 20%
Nil rate band limit £325,000 £325,000 £325,000
Residence nil rate band limit £175,000 £175,000 £175,000
Taper threshold for residence nil-rate band            £2,000,000 £2,000,000 £2,000,000  
Stamp Duty Land Tax - residential property   Read more about Stamp Duty Land Tax
Standard Rate (on portion of value above threshold)  
£0 to £125,000 0% 0% 0%
£125,000 to £250,000 2% 2% 2%
£250,000 to £925,000 5% 5% 5%
£925,000 to £1,500,000 10% 10% 10%
£1,500,000 + 12% 12% 12%
Rate (on portion of value above threshold) on or after 1 April 2016 if purchase is of an additional residential property  
£0 to £125,000 3% 3% 3%
£125,000 to £250,000 5% 5% 5%
£250,000 to £925,000 8% 8% 8%
£925,000 to £1,500,000 13% 13% 13%
£1,500,000 + 15% 15% 15%
  Rates for first-time buyers purchasing properties worth £500,000 or less  
£0 to £300,000 0%            0% 0% 0%  
£300,000 to £500,000 5%            5% 5% 5%  
£500,000 + Standard rates Standard rates Standard rates  
Stamp Duty Land Tax - non-residential property   Read more about Stamp Duty Land Tax
0 to £150,000 0% 0% 0%
£150,000 to £250,000 2% 2% 2%
£250,000 + 5% 5% 5%

Business

Tax/Allowance 2020/21 2021/22 2022/23 Further information
Corporation tax rates   Read more about tax on businesses
Main rate
 19% 19% 19%
Value Added Tax
  
Standard rate 20% 20% 20%
Reduced rate 5% 5% 5%
Zero rate items  0% 0%  0%
VAT registration threshold £85,000 £85,000 £85,000
VAT deregistration threshold
 £83,000 £83,000 £83,000

New flat rate State Pension

Tax/Allowance 2020/21 2021/22 2022/23 Further information
Full new flat rate State Pension(per week) £175.20 £179.60 £185.15 Read more about the new State Pension

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Inheritance Tax

Transferable nil rate band: planning ideas
Normal expenditure out of income exemption
Inheritance Tax potentially exempt transfers
Family investment companies
Inheritance Tax meets Child Benefit Tax
Inheritance Tax taper relief
Inheritance tax and pensions
Gifting guidance for attorneys and deputies
Transferable nil rate band: the facts

ISA

Individual savings accounts (ISAs): planning ideas
Individual Savings Accounts (ISAs): the facts

Pensions allowances

Lifetime allowance: the facts
Money purchase annual allowance (MPAA)
Annual allowance for pension savings
Tapered annual allowance planning ideas and potential pitfalls
Tapered annual allowance

Trusts

Trustee residence status rules for the UK

"Prudential" is a trading name of Prudential Distribution Limited. Prudential Distribution Limited is registered in Scotland. Registered Office at Craigforth, Stirling FK9 4UE. Registered number SC212640. Authorised and regulated by the Financial Conduct Authority. Prudential Distribution Limited is part of the same corporate group as the Prudential Assurance Company. The Prudential Assurance Company and Prudential Distribution Limited are direct/indirect subsidiaries of M&G plc, a company incorporated in the United Kingdom. These companies are not affiliated in any manner with Prudential Financial, Inc, a company whose principal place of business is in the United States of America or Prudential plc, an international group incorporated in the United Kingdom.