Autumn Budget 2021: Income Tax, NICs, claims and reliefs

The Chancellor made the following announcements in that affect Income Tax rates, allowances, reliefs and claims in his Autumn Budget 2021.

Tax allowances, rates and bands

In the 2022-23 tax year:

• The higher rate threshold will remain at £37,700 and the additional rate and will remain at £150,000.
• The personal allowance will remain at £12,570.
• The Transferable married couples allowance will remain at £1,260.
• The Blind persons allowance increases to £2,600.

Savings and dividend income

In the 2022-23 tax year:

• The starting rate for Savings income will remain at £5,000.
• The savings allowances remain at £1,000 (basic rate taxpayers) and £500 (higher rate taxpayers).
• Dividend Tax rates will increase by 1.25%. The dividend ordinary rate will be set at 8.75%, the dividend upper rate at 33.75% and the dividend additional rate at 39.35%. The dividend trust rate will also increase to 39.35%.  This was announced in September 2021. 
  • See Increases to Dividend Tax Rates
• The dividend allowance remains at £2,000. 
• ISA, Junior ISA and Child Trust Funds limits are to remain at £20,000, £9,000 and £9,000 respectively.

National Insurance

In the 2022-23 tax year:

• A temporary 1.25% increase to National Insurance Contributions (NICs) will apply. The levy will only apply to Class 1 and 4 NICs. This was announced in September 2021.
  • See Increases to National Insurance Rates
• The NIC's Upper Earnings Limit and Upper Profits Limit are to be maintained at 2021-22 levels. 
• Other NIC limits and Class 2 and Class 3 NIC rates will be increased based on inflation.

From 6 April 2023:

• A new Health and Social care levy of 1.25% will replace the temporary NICs increase. This was announced in September 2021.

Tax Reliefs

From October 2021:

• HMRC will not collect income tax on payments made through the the Household Support Fund, and similar schemes in the devolved administrations. The government will legislate in Spring 2022 to clarify that payments made through these schemes are exempt from income tax. Tax deductions will cease with immediate effect.

Other Provisions

From 6 April 2022

• Legislation will be introduced to allow a pension scheme to settle an Annual Allowance Charge of £2,000 or more from the funds in the pension scheme.

  • See NHS Pensions: Scheme pays elections
• The pension tax framework will be adapted so that it applies as intended to public sector pensions as a result of the reforms.

In the 2023-24 Tax Year

• Transitional provisions will apply in respect of the Basis Period Reform rules.
  • See Consultation: Income Tax Basis Period reform

In the 2024-25 Tax Year

• New Basis Period Reform rules will be in force.
  • See Consultation: Income Tax Basis Period reform

From 6 April 2025

• A future Finance Bill will legislate to allow top-up pension payments to be made for low earners using Net Pay Arrangements.

From 6 April 2028

• The minimum pension age is to increase from 55 to 57.

Useful guides on this topic

Autumn Budget 2021: At a glance
A summary of key budget announcements together with items published without announcement.

2021/22 Tax Data Card 
A summary of key tax rates and allowances for 2021-22 and 2020-21.

Dividend tax (subscriber guide)
This practical tax guide explains how dividends are taxed on or after 6 April 2016. It includes HMRC's own examples, more detailed examples, including an Owner Managed Business (OMB) section together with tax planning tips.