Personal Taxation

Main personal allowances and reliefs

2022/23

2021/22

Personal allowance1

£12,570

£12,570

Married couple’s / civil partner’s transferable allowance

£1,260

£1,260

Married couple’s / civil partner’s allowance
at 10%2
(if at least one born before 6/4/35)

maximum

£9,415

£9,125

minimum

£3,640

£3,530

Blind person’s allowance

£2,600

£2,520

Rent-a-room relief

£7,500

£7,500

Registered pension schemes

 

 

  • Lifetime allowance

£1,073,100

£1,073,100

  • Annual allowance3

£40,000

£40,000

  • Money purchase annual allowance

£4,000

£4,000

1  Personal allowance reduced by £1 for every £2 of adjusted net income over £100,000.
2  Reduced by £1 for every £2 of adjusted net income over £31,400 (£30,400 for 2021/22), until the minimum is reached.
3  Reduced by £1 for every £2 of adjusted income over £240,000 to a minimum of £4,000, subject to threshold income being over £200,000.

Income tax rates and bands

2022/23

2021/22

UK taxpayers excluding Scottish taxpayers’ non-dividend, non-savings income

20% basic rate on first slice of taxable income up to

£37,700

£37,700

40% higher rate on next slice of taxable income over

£37,700

£37,700

45% additional rate on taxable income over

£150,000

£150,000

All UK taxpayers

Starting rate at 0% – on band of savings income up to4

£5,000

£5,000

Personal savings allowance at 0%: 
basic rate taxpayers
higher rate taxpayers
additional rate taxpayers


£1,000
£500
£0


£1,000
£500
£0

Dividend allowance at 0% tax – all individuals

£2,000

£2,000

Tax rates on dividend income:

basic rate taxpayers

8.75%

7.5%

higher rate taxpayers

33.75%

32.5%

additional rate taxpayers

39.35%

38.1%

4 Not available if taxable non-savings income exceeds the starting rate band.

Scottish taxpayers’ non-dividend, non-savings income

2022/23

2021/22

19% starter rate on taxable income up to

£tbc

£2,097

20% basic rate on next slice up to

£tbc

£12,726

21% intermediate rate on next slice up to

£tbc

£31,092

41% higher rate on next slice up to

£tbc

£150,000

46% top rate on income over

£tbc

£150,000

Trusts                                                        

2022/23

2021/22

Standard rate band generally

£1,000

£1,000

Dividends (rate applicable to trusts)

39.35%

38.1%

Other income (rate applicable to trusts)

45%

45%

High income child benefit charge: 1% of benefit per £100 of adjusted net income of £50,000 – £60,000.

Personal taxation and investments

Income tax

For 2022/23 to 2025/26, the personal allowance will remain at £12,570 and the higher rate threshold at £50,270, as previously announced. In Scotland, the higher rate threshold for non-savings, non-dividend income will be announced in the Scottish Budget on 9 December.

Dividend tax

The dividend allowance will remain at £2,000. The rate of tax on dividends above the dividend allowance will rise by 1.25 percentage points from 2022/23, as announced in September 2021.

Tax year

Basic rate         

Higher rate

Additional rate

2021/22

7.50%

32.50%

38.10%

2022/23 onwards

8.75%

33.75%

39.35%

The dividend trust rate of tax will be 39.35% for 2022/23


SAVER
Don’t lose your personal allowance. Your personal allowance of £12,570 is reduced by 50p for every pound by which your income exceeds £100,000. You may be able to make a pension contribution or a charitable gift to bring your income below £100,000.

National insurance contributions (NICs)

The lower NIC thresholds and limits will rise by 3.1%, in line with CPI inflation to September 2021. The upper earnings limit, upper secondary thresholds and upper profits limit will remain aligned to the unchanged higher rate threshold at £50,270 for 2022/23, as previously announced.

NIC rates will rise by 1.25 percentage points in 2022/23, as announced in the NHS/social care package launched in September 2021. From 2023/24, NIC rates will revert to their previous levels and a new 1.25% Health and Social Care Levy will apply to employers, employees and the self-employed (including those above State pension age).

Tax year

Employer: Class 1

Employee: Class 1

Self-employed: Class 4

 

Main

Higher

Main

Higher

2021/22

13.80%

12.00%

2.00%

9.00%

2.00%

2022/23

15.05%

13.25%

3.25%

10.25%

3.25%


THINK AHEAD

NICs increase from 6 April 2022. Salary sacrifice arrangements, for example for employers rather than employees to make pension contributions, will offer even greater savings in 2022/23.

Pension contribution tax relief

In 2025/26, a new system will be introduced so that HMRC can make 20% top-up payments in respect of contributions made from 2024/25 onwards directly to low-earning individuals saving in a pension scheme using a Net Pay Arrangement. At present such contributions may not benefit from any tax relief and these top-ups will help align their outcomes with equivalent savers using Pension Relief at Source to save into pension schemes.

Pension charge cap

There will be consultation on further changes to the regulatory charge cap for defined contribution pension schemes to unlock institutional investment to support some of the most innovative businesses.

Company car tax

The company car tax rates already announced for 2022/23 will remain frozen until 2024/25, as announced at Budget 2020. From 2022/23 there will be no difference in the scale rate for emissions measured on NEDC or WLTP cycles.

Individual savings account (ISA) subscription limits

The ISA annual subscription limit for 2022/23 will remain at £20,000 and the corresponding limit for junior ISAs (JISAs) and child trust funds (CTFs) will stay at £9,000.

National Savings & Investment (NS&I) Green Savings Bonds

Green Savings Bonds, which were announced in the March 2021 Budget, were launched by NS&I on 22 October and will be on sale for a minimum of three months. The NS&I Green Savings Bonds are a three-year fixed-term savings product with an interest rate of 0.65% and investment limits between £100 and £100,000.

Lifetime allowance

The lifetime allowance for pension savings will remain frozen at £1,073,100.

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