What's changing in the new tax year?

Now’s a good time to look at some of the changes to be introduced in the 2021/2022 tax year and consider how they might impact you.

The threshold for National Insurance contributions (NICs) will rise from £9,500 to £9,568 in the 2021/2022 tax year. So earnings up to that amount will be exempt from National Insurance. This will save a typical employee around £8 and a typical self-employed person around £6 each year.¹

The national living wage for people aged over 23 will rise by 2.2% to £8.91 per hour.² There will also be increases to the national minimum wage for those aged under 23.

State Pensions will rise by 2.5% in 2021/2022.³ Those on the full new single-tier State Pension will receive an extra £4.40 per week and those on the basic State Pension will receive an extra £3.35 per week.³

The amount you can save in a Junior ISA or Child Trust Fund will remain at £9,000 per child in the 2021/2022 tax year.¹ Meanwhile, the allowance for ISAs will remain at £20,000.

Non UK residents will incur a 2% stamp duty surcharge when buying residential property in England and Northern Ireland, but not until 1 April 2021. The government said this would help control house price inflation and help get UK residents onto the housing ladder.¹

The personal allowance (the tax-free amount you can earn) will rise to £12,570 for the 2021/2022 tax year. Alongside this, the basic rate limit (the 20% tax bracket) will stay at £37,700. This means you’re able to earn up to £50,270 before crossing the higher level of tax threshold. Different rates and bands apply to Scottish tax payers.

Explore more: What is an ISA?

If you want to make the most of the tax-free allowances or you’re looking to boost your savings pot this financial year, read our guide on how to save money.

¹GOV.UK Budget 2021 Policy Paper

²GOV.UK National Minimum Wage and National Living Wage rates

³Which.co.uk State pension to rise by up to £229 in 2021