Income tax and National Insurance contributions
The government will maintain the income tax Personal Allowance and higher rate threshold and National Insurance contributions Upper Earnings Limit and Upper Profits Limit at their 2021-2022 levels up to and including 2025-2026.
As announced at Spending Review 2020, the government will increase the income tax Personal Allowance and higher rate threshold, and all National Insurance contributions (NICs) thresholds for 2021 to 2022, in line with September 2020 CPI. The Personal Allowance will therefore increase to £12,570, the higher rate threshold, NICs Upper Earnings Limit and NICs Upper Profits Limit will all increase to £50,270, and the NICs Primary Threshold/Lower Profits Limit will increase to £9,568 for 2021 to 2022.
As announced at Budget 2021, the government will maintain the Personal Allowance at £12,570 and higher rate threshold at £50,270 for 2022 to 2023, 2023 to 2024, 2024 to 2025 and 2025 to 2026. The additional rate threshold is fixed at £150,000. The NICs Upper Earnings Limit and Upper Profits Limit will remain aligned to the higher rate threshold at £50,270 for these years.
This policy takes steps to ensure the sustainability of the public finances and fund our vital public services in a fair and sustainable way. This decision will not reduce take home pay and the highest-earning households will continue to contribute more.
The Personal Allowance applies across the UK. The higher rate threshold and additional rate threshold for savings and dividends income also apply UK-wide. The higher rate threshold and additional rate threshold for non-saving non-dividend income only apply to taxpayers in England, Wales, and Northern Ireland. Income tax thresholds on non-savings, non-dividend income for Scottish taxpayers are set by the Scottish Parliament. The NICs Upper Earnings Limit and Upper Profits Limit apply across the UK.
The table below shows the income tax bands for years 2020 to 2021 until 2025 to 2026 please see more details, including the relevant bands in Scotland.
| Band | Tax rate | Income tax bands | |||||
| 2020 to 2021 | 2021 to 2022 | 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | ||
| Personal allowance | 0% | Up to £12,500 | Up to £12,570 | Up to £12,570 | Up to £12,570 | Up to £12,570 | Up to £12,570 |
| Basic rate | 20% | £12,501 to £50,000 | £12,571 to £50,270 | £12,571 to £50,270 | £12,571 to £50,270 | £12,571 to £50,270 | £12,571 to £50,270 |
| Higher rate | 40% | £50,001 to £150,00 | £50,271 to £150,00 | £50,271 to £150,00 | £50,271 to £150,00 | £50,271 to £150,00 | £50,271 to £150,00 |
| Additional rate | 45% | over £150,000 | over £150,000 | over £150,000 | over £150,000 | over £150,000 | over £150,000 |