Finance Act 2021 (c. 26)

PART 1 U.K. Income tax, corporation tax and capital gains tax

Income tax charge, rates etc U.K.

1 Income tax charge for tax year 2021-22 U.K.

Income tax is charged for the tax year 2021-22.

2 Main rates of income tax for tax year 2021-22 U.K.

For the tax year 2021-22 the main rates of income tax are as follows—

(a) the basic rate is 20%,

(b) the higher rate is 40%, and

(c) the additional rate is 45%.

3 Default and savings rates of income tax for tax year 2021-22 U.K.

(1) For the tax year 2021-22 the default rates of income tax are as follows—

(a) the default basic rate is 20%,

(b) the default higher rate is 40%, and

(c) the default additional rate is 45%.

(2) For the tax year 2021-22 the savings rates of income tax are as follows—

(a) the savings basic rate is 20%,

(b) the savings higher rate is 40%, and

(c) the savings additional rate is 45%.

4 Starting rate limit for savings for tax year 2021-22 U.K.

(1) For the tax year 2021-22, the amount specified in section 12(3) of ITA 2007 (the starting rate limit for savings) is “£5,000”.

(2) Accordingly, section 21 of that Act (indexation) does not apply in relation to the starting rate limit for savings for that tax year.

5 Basic rate limit and personal allowance for future tax years U.K.

(1) For the tax years 2022-23, 2023-24, 2024-25 [F1 , 2025-26, 2026-27 and 2027-28], the amount specified in section 10(5) of ITA 2007 (basic rate limit) is “£37,700”.

(2) For the tax years 2022-23, 2023-24, 2024-25 [F2 , 2025-26, 2026-27 and 2027-28], the amount specified in section 35(1) of ITA 2007 (personal allowance) is “£12,570”.

(3) Accordingly—

(a) section 21 of ITA 2007 (indexation of basic rate limit) does not apply in relation to the basic rate limit, and

(b) section 57 of ITA 2007 (indexation of allowances) does not apply in relation to the amount specified in section 35(1) of that Act,

for the tax years 2022-23, 2023-24, 2024-25 [F3 , 2025-26, 2026-27 and 2027-28].

Textual Amendments

F1 Words in s. 5(1) substituted (10.1.2023) by Finance Act 2023 (c. 1), s. 5(2)

F2 Words in s. 5(2) substituted (10.1.2023) by Finance Act 2023 (c. 1), s. 5(3)

F3 Words in s. 5(3) substituted (10.1.2023) by Finance Act 2023 (c. 1), s. 5(4)