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UK Tax & Allowances

7 min read 6 Apr 22

By The Technical Team

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	Read more on personal allowances

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

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	2022/23	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
Lifetime Allowance limit		£1,073,100	£1,073,100	£1,073,100	Read more about pensions allowances
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
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	Read more about Tax free savings accounts
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
Main rates for individuals		10% / 20%	10% / 20%	10% / 20%	Read more about Capital Gains Tax
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
Rate (for estates)		40%	40%	40%	Read more about Inheritance tax
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
Standard Rate (on portion of value above threshold)					Read more about Stamp Duty Land Tax
£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, to £500,000	5%	5%	5%	5%
£500,000 +	Standard rates	Standard rates	Standard rates	Standard rates
Stamp Duty Land Tax - non-residential property
0 to £150,000		0%	0%	0%	Read more about Stamp Duty Land Tax
£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

Related insights

"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 Limited. The Prudential Assurance Company Limited and Prudential Distribution Limited are direct/indirect subsidiaries of M&G plc which is a holding company registered in England and Wales with registered number 11444019 and registered office at 10 Fenchurch Avenue, London EC3M 5AG, some of whose subsidiaries are authorised and regulated, as applicable, by the Prudential Regulation Authority and the Financial Conduct Authority. 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.