Personal Tax Planning for 2021/ 22
- Personal tax allowance increased to £12,570
- Basic-rate threshold capped at £50,270, higher-rate up to £150,000
- Income tax rates have been frozen until April 2026 - which could push many taxpayers into higher tax brackets over the next five years -resulting in them paying considerably more income tax
- Dividends allowance remains at £2,000
- Above the dividends threshold - a basic-rate taxpayer will pay tax at 7.5% and 32.5% for a higher-rate taxpayer.
Capital Gains Tax (CGT)
- Assets sold in 2021/ 2022 for more than £12,300 will be liable for capital gains tax (CGT)
- The rate of tax will depend on the type of asset sold and which rate of income tax you pay.
- Assets held in a trust are treated differently - capital gains tax kicks in at 28% from residential property or 20% for gains from other chargeable assets worth more than £6,150
- For 2021/ 22 until April 2026 - the lifetime pensions allowance remains capped at £1,073,100.
Some pension savers face being hit with a 55% tax charge if they withdraw anything above this limit as a lump sum over the next five years. If the amount is taken as income - they face a 25% tax charge.
- The maximum you can save into your pension pot for 2021/22 remains at £40,000.
- Estates worth less that £325,000 will be tax-free, while the flat-rate of inheritance tax above this threshold remains at 40%
- The final increase to the residence nil-rate band was announced in 2020/21 - making it possible to protect a further £175,000 when passing on the family home to children or grandchildren.
For personal tax advice and support on 01223 810 100