Income tax allowances

The income tax Personal Allowance for the year 2021/2022 is £12,570 (2020/2021 – £12,500). If your total income is less than this during the tax year, you have no tax to pay.

income tax bury st edmunds

Tax rates 2021-22: Income Tax Personal Allowances

2021/2022

2020/2021

Personal Allowance (1)

£12,570

£12,570

Marriage Allowance

£1,260

£1,260

Blind Person’s Allowance

£2,600

£2,600

Rent a room relief

£7,500

£7,500

Trading income

£1,000

£1,000

Property income

£1,000

£1,000

  • (1)
    This allowance is subject to the £100,000 income limit. The individual’s personal allowance is reduced where their income is above this limit. The allowance is reduced by £1 for every £2 above the limit.
  • (2)
    This age-related allowance is reduced by £1 for every £2 of income above this limit.
  • (3)
    This allowance is subject to the £30,400 income limit. The individual’s married couple’s allowance is reduced by £1 for every £2 above the limit. That reduction only applies after any reduction to their personal allowance (see note 1). The individual’s married couple’s allowance is never reduced below the minimum amount. Tax relief for the Married Couple's Allowance is given at the rate of 10%.
  • (4)
    This is also the maximum relief for maintenance payments where at least one of the parties is born before 6 April 1935.
  • (5)
    This transferable allowance is available to married couples and civil partners who are not in receipt of married couple’s allowance. A spouse or civil partner who is not liable to income tax; or not liable at the higher or additional rate, can transfer this amount of their personal allowance to their spouse or civil partner. The recipient must not be liable to income tax at the higher or additional rate. The recipient is eligible to a tax reduction of 20% of the transferred amount.
  • (6)
    Individuals will not have to pay tax on the first £2,000 of dividend income they receive.
  • (7)
    Basic rate taxpayers will not have to pay tax on the first £1,000 of savings income they receive and higher rate taxpayers will not have tax to pay on their first £500 of savings income.

Please note: the figures shown below apply to English taxpayers. Scottish taxpayers have different rates and bands. For more details, visit

2021/2022

2020/2021

Starting rate limit for savings(8)

£0 – £5,000

£0 – £5,000

Starting rate for savings income(8)

0%

0%

Basic rate band

£1 – £37,700

£1 – £37,700

Basic rate

20%

20%

Higher rate band

£37,701 – £150,000

£37,701 – £150,000

Higher rate

40%

40%

Additional rate band

Over £150,000

Over £150,000

Additional rate

45%

45%

  • (8)
    If, after deducting your Personal Allowance from your total income liable to Income Tax, your non-savings income is above the starting rate limit then the starting rate for savings will not apply. Non-savings income includes income from employment, profits from self-employment, pensions, income from property and taxable benefits.

The rates available for dividends are the 7.5 per cent ordinary rate, the 32.5 per cent dividend upper rate and the dividend additional rate of 38.1 per cent.

The self-employed can claim business expenses against their income. So make sure you include all possible justifiable business expenses on your self-assessment form. This also applies to capital allowances for expenditure on plant and equipment, including computers and tools, for example, used for your business.

It is worth remembering you may be able to pay further contributions to your pension, which can utilise unused tax relief.

One other point to remember is if one spouse is a tax payer and the other is not or pays tax at a lower rate it is worth considering switching certain investments to take advantage of their unused tax allowances.

Since its introduction in 1990, Gift Aid allows taxpayers to receive tax relief on gifts made to qualifying charities.

Bespoke
Financial
Solutions
We are here to help you
invest in your future

Pensions & Retirement

On any situation and anytime

Savings & Investments

On any situation and anytime

Protecting your finances

On any situation and anytime
Who
We Are
St Edmundsbury Wealth Management Ltd offers advice to individual and corporate clients in Suffolk and across East Anglia. The firm has eight Financial Advisers with combined experience of 128 years. Their aim is to deliver good advice in a clear fashion, backed up by excellent service.