It’s April, which means it’s time to welcome in a new tax year. For most small and medium businesses across the UK, the 2020/21 tax year has been a tough one, but hopefully, 2021/22 will offer an improving landscape. At the beginning of the tax year, it’s important to be aware of incoming changes which might affect the financial planning of individuals and businesses during the coming 12 months.
Personal tax changes
The biggest changes to personal tax allowances are in the personal allowance and income tax brackets. Personal allowance is rising this year from £12,500 to £12,570, with brackets for both basic tax and higher rate tax rising in line with this. This means basic tax of 20% now starts at £12,571 and higher rate tax of 40% now starts at £50,271. The additional rate tax of 45% remains unchanged on incomes above £150,000.
National minimum wage
The national minimum wage is also rising this year, though only by a small amount. As of April 1st 2021, the NMW is now £8.91 for all workers aged 23 and over – dropping the age requirement for earning this rate by two years compared to last year. Rates for younger adults, teens, and apprentices are also rising.
This tax year marks the increase of the benefit in kind (BiK) tax rates for company cars, which means cars first registered after 5th April 2020 will have their benefit charge raised by 1%. Electric cars will have a tax change of 1% on their list price in 2021/22, increasing to 2% in the following tax year. BiK tax on fuel will also rise in line with these changes.
For the 2021/22 tax year, corporation tax will remain at 19%, though businesses should be aware that there is a planned rise to 25% coming from April 2023.
Get in touch
This is just a quick summary of some of the biggest changes that this new tax year has brought, but there’s plenty more to know. If you’re looking for professional financial advice and information, contact us at CWR Accountants today.