The new tax year 2021/22 officially begins today – Tuesday 6th April. It means a brand new tax year for Brits and UK households. The day marks the change where tax allowances and thresholds change, as do savings thresholds and benefit rates. People are being urged to keep abreast of these changes as the start of the tax year triggers many of the new rates.
Here we look at some of the main changes and what the new tax year might mean for you. A number of these changes were also outlined in the 2021 Budget. It is however important to know, a number of the key tax initiatives have remained the same for the 2021/22 Tax Year. These include Capital Gains Tax, Inheritance Tax, Entrepreneurs’ Relief, Dividend Allowance and Corporation Tax to name but a few.
1) Guarantor Mortgages Make a Comeback
Rishi Sunak announced he is bringing back 95% mortgages from 19th April. He has pledged the Government will pay banks or building societies back if a person is unable to make their mortgage repayments.
2) Increase of State Pension by 2.5%
The state pension is set to increase from 12th April 2021. It will increase by a set 2.5% each week. The increase will mean people over 66 who are on the full state pension will receive £179.60 a week. This equates to an increase of £228.60 for the full financial year.
3) Increase of Personal Allowance and Tax Threshold
The personal non-taxable allowance has increased from £12,500 to £12,570. This essentially means you won’t pay any tax on the first £12,570 you earn. The 40% higher tax rate band has also increased marginally from £50,000 to £50,271. The additional-rate Income Tax threshold of 45% remains at £150,000.
These tax brackets are set to be frozen for the next five years.
4) Increase in Universal Credit
There will be a slight increase from 12th April 2021. This is in addition to the £20 uplift as a result of the COVID pandemic.
Under 25 and single – Increase from £256.05 to £257.33
Over 25 and single – Increase from £323.22 to £324.84
Joint Claimants under 25 – Increase from £401.92 to £403.93
Claimants caring for a disabled person – £162.92 to £163.73
5) Child Benefit
From 12th April child benefit will increase from £21.05 to £21.15 for people with one child. For people with more than one child it increases from £13.95 to £14 for each additional child
6) Housing Benefit
Housing Benefit will increase from £58.90 to £59.20 for people under 25. It will increase from £74.34 to £74.70 for over 25’s.
7) Statutory Sick Pay
Statutory Sick Pay will rise slightly from £95.85 per week to £96.35.
8) Statutory Maternity Pay
Maternity Pay will increase slightly from £151.20 to £151.97, or 90% of the employee’s average weekly earnings if it is less than this amount.
9) Employment and Support Allowance
Support Allowance for single over-25’s will increase from £74.35 to £74.70.
10) Personal Independence Payments (PIPs)
PIP will increase from £89.15 to £89.60 for enhanced claimants and from £59.70 to £60 for standard claimants. The PIP mobility component is also marginally rising.
We are available at Kinsella Tax to offer advice on your Tax and VAT affairs. If you would like to know more about tax changes for 2021/22 please contact Kinsella Tax. Call us on 0800 471 4546 or you can contact us here.