Your Allowances for the 2021/2022 Tax Year

In this small blog our Compliance Officer, Lewis Atkinson, gives us a reminder of what the main allowances are for the impending 2021/2022 tax year, which starts today! (6th April 2021)

Personal Allowance

This is the amount of income you can earn before paying Income Tax. For 2021/2022 this allowance is £12,570. Whilst this increase is good news and means more money in your pocket, the government has announced this amount will be frozen until 2026.

Marriage Allowance

Those who are married or in a civil partnership, who are not liable to income tax have the option to transfer unused personal allowance to their partner, whose Personal Allowance will increase. The allowance for the upcoming tax tear is £1,260.

ISA Allowance

No changes here, the current £20,000 subscription limit to Individual Savings Accounts will still apply next tax year. Up to £9,000 can be contributed to a Junior ISA.

Pension Annual Allowance

You can still contribute up to £40,000 per year into pensions and still receive tax relief. Remember though, the amount you can contribute is limited to your earnings for the year but capped at £40,000.

Pension Lifetime Allowance

The Lifetime Allowance is a limit on the amount of pension benefits that can be drawn from pension schemes without triggering an extra tax charge. The Lifetime allowance for the 2021/2022 tax year will remain at £1,073,100.

Dividend Allowance

Dividends are money paid to shareholders from the profits made by a business. The amount you can receive tax-free as dividend income next year will remain at £2,000.

Capital Gains Tax Allowance

Capital Gains Tax or CGT is paid when you sell them some types of investments that have made a profit. In 2021/2022 the allowance which you can receive tax-free from these sales will remain at £12,300.

If you want to know more about the allowances for 2021/2022, or want to know how best you can utilise them, our Financial Planners can help, so why not get in touch? You can reach us at [email protected] or call us on 01482 219325. 

Source: https://www.gov.uk/government/publications/budget-2021-overview-of-tax-legislation-and-rates-ootlar/annex-a-rates-and-allowances

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