Income Tax (IT) key measures included in Budget 2021 are as follows:

  •  In the Spending Review 2020, the following increases were announced:
    • Personal allowance 2021/2022: £12,570.
    • Basic rate threshold 2021/2022: £37,700.
    • Higher rate threshold 2021/2022: £50,570.
  • These figures will remain the same until 2025/2026.
  • These changes apply to England, Wales and Northern Ireland, but not Scotland.

National Insurance

  • The National Insurance Upper Earnings Limit and Upper Profits Limit will remain aligned with the higher rate threshold (£50,570) for these years. This will apply to the whole of the UK.

Savings income

  • The 0% Savings rate will remain at £5,000 for 2021/2022.

Trading Losses

There will be a temporary extension to the loss carryback period. Trading losses can be carried back up to three years (instead of the usual one year) for a maximum of £2 million of tax losses.

  • The £2 million limit applies to trading losses incurred in each of the following tax years 2020/2021 and 2021/2022. 
  • This will not affect the current one-year carryback rules for individuals.


  • The Lifetime Allowance for pension contributions will remain at £1,073,100 until 2025/2026.
    • The Finance Bill 2021 will remove the annual Consumer Price Index Link rise for the next five years. 

Tax relief

  • Financial support payments, made by the UK Government or devolved administrations, to individuals who are potential victims of modern slavery and human trafficking will be exempt from Income Tax. This is retrospective back to 1 April 2009, when the payments started.

Useful guides on this topic

Budget 2021: Subscriber guide
A detailed guide with links to more detail on all the key topics for SMEs and their owners.

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

Losses, trade losses and sideways relief
How can trade losses be utilised? What are the restrictions?


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