Income tax

The Personal Allowance increases to £12,570 from the 6th April and the threshold above which higher earners start paying 40% tax also increases, to £50,270.

However, these allowances will then be frozen until April 2026.

Pension changes

Standard Lifetime Allowance

The standard Lifetime Allowance for pensions will remain at £1,073,100. This has also been frozen until April 2026.

Annual Allowance

There are no changes to pension annual allowances (AA). The standard AA remains at £40,000 and the high income AA taper rules also remain unchanged.

Individual Savings Account (ISA)

The ISA annual subscription limit for 2021/22 will remain unchanged at £20,000.

Capital Gains Tax

The capital gains tax allowance will remain at £12,300 and is frozen at this level until April 2026.

Inheritance Tax

Inheritance tax rates and exemptions

The Inheritance Tax Nil Rate Band will remain frozen at £325,000 until April 2026. The Residence Nil Rate Band also remains frozen at £175,000 until April 2026.

General Tax issues

Corporation Tax is increased to 25% from 2023/24 for Companies that make profits in excess of £250,000. Companies that make profits of less than £50,000 will maintain a Corporation Tax rate of 19%. Those companies that make profits between these two levels will pay a Corporation Tax Rate that is somewhere between these two rates, but this ‘tapered’ rate has yet to be announced.

National Insurance Contribution Tax threshold increases to £9,568.

Stamp Duty Holiday

The level at which Stamp Duty on house purchases is payable was increased from £125,000 to £500,000 last year. This Stamp Duty ‘holiday’ was due to end on March 31st 2021 but has now been extended until June 30th 2021. It will then be reduced to £250,000 and won’t go back to £125,000 until September 30th 2021.

If you would like to discuss your current financial planning arrangements in relation to any of these changes, or to make sure that you are maximising tax saving opportunities, please do not hesitate to contact us.