Tax rates and allowances are set by the government every year, and there had always been changes in the tax rate and allowances every year due to multiple factors. So, it is crucial for one to be sure what is the latest tax rate and personal allowances one does not have to pay taxes on as well as allowances that one has to pay taxes on.
Latest tax rates and allowances in the UK for 2021 – 22
Before going into tax rates, taxable allowances and non-taxable allowances, the current tax year is between Apr 6, 2021, and Apr 5, 2022.
How much tax an individual pays each year to the government depends on
- How much is the income above the personal allowance?
- How much of the individual’s income falls within each tax band?
The standard personal allowance set by the government for the tax year is £12,570, which is a non-taxable amount. Personal allowances could vary if the individual filling claims either blind person allowance or marriage allowance, but the income should be less than £100,000. If the individual’s income is larger than £100,000, then the personal allowance would be significantly less.
Income tax rates and bands
The income tax bands are different, and one should take note where they reside before filing their returns.
- For taxable income up to £12,570 there would be 0% taxable income.
- For taxable income between £12,571 and £50, 270, the tax rate for this bracket is 20%.
- For taxable income between £50,271 and £150,000, the tax rate for this bracket is 40%.
- For taxable income over £150,000, the tax rate would be 45%.
Note: An individual is not eligible for a personal allowance if the taxable income is over £125,140.
Other tax-free allowances
- Savings interest
- First £1,000 income from self-employment
- First £1,000 from a property rented (unless the individual is using Rent a Room Scheme)
Tax-relief in case the individual is married or in a civil partnership
One can reduce their partner’s tax if their income is less than standard personal allowance and claiming marriage allowance.
If one or both partners are born before Apr 6, 1935, they can claim Married Couple allowance.
Filing a tax return can be a bit of a hassle, especially if one has not done that before. There are ways one can pay fewer taxes, and that is by hiring a tax return to file their taxes. There are several schemes and incentives offered by the government that result in less taxable income for the individual. By hiring a tax return professional, one can pay their fair share and not a dime more. A tax return professional is aware of everything and they will help you with the latest tax rates and allowance in 2021. Certainly, hiring accountant is the best way to manage your finances in an effortless way.
Majestic Accounts is the place for you to be if you are looking to hire an accountant for your Self Assessment tax return. The highly qualified tax advisors provide their service considering an individual’s unique circumstances and minimising the individual’s tax liability if and when possible while filing a tax return. Majestic Accountants provides various accounting services to their customers at a fair price.