New Tax year

The New Tax year started on the 6^th of April and with it came plenty of changes to the rates and thresholds of Tax.

You can find all the changes at Gov.uk but I thought I’d summarise some of the main ones here.

Personal Tax

The Standard Personal Allowance increases to £12,570 for the 2021/22 tax year (up from £12,500 in 2020/21). This is the amount you can earn before you start paying tax at 20%.

You can then earn up to a total of £50,270 before paying the Higher Rate of income tax which is 40%. This threshold has increased from £50,000 in 2020/21.

Both of these thresholds will now be frozen until 2026.

There is no Personal allowance on taxable income over £125,140

Capital Gains Tax

The Capital Gains Tax annual exempt amount for individuals remains at £12,300 for the 2021/22 tax year and will be frozen at that level until 2025/26

Inheritance Tax

There is no change to the Inheritance Tax (IHT) nil rate band with the threshold remaining at £325,000. This is also frozen at that level until 2026.

Corporation Tax

Corporation Tax will remain at 19% for the 2021/22 tax year, but the Chancellor has announced plans for a rise in the rate to 25% from April 2023.

From that date, there will be a new small profits rate of 19% for companies with profits under £50,000. The rate will attract a tapered rise as profits increase.

The main rate of 25% will apply to businesses with profits over £250,000.

Alcohol and Fuel Tax

Duty on alcohol and fuel is frozen for the next 12 months and planned increases cancelled.

Stamp Duty Land Tax

The stamp duty holiday for the first £500,000 Nil Rate Band of the purchase price of a property will continue until the end of June 2021.

From the 1^st of July 2021, the Nil Rate Band will be reduced to £250,000 until 30th September 2021. From the 1st of October 2021 the Nil Rate Band will return to £125,000.