You might not have greeted the 6th April with a glass of bubbly, fireworks and nibbles but the new tax year has now started.
The 2021/22 tax year began on the 6th April and there are a few changes that you might want to know about:
• The personal allowance – the amount that you can earn before paying any income tax increased from £12,500 to £12,570.
• The threshold for paying higher rate income tax (40%) increased from £50,000 to £50,270. (Please note that in the recent budget both the personal allowance and the threshold for higher rate income tax are now frozen until 2026!)
• There are no changes to the tax-free dividend allowance or to the rates of tax on dividend.
• Increase in company car benefit in kind tax rates – these will generally increase by 1%.
• No change to the threshold for the higher-income child benefit charge – this is still at £50,000 so will now catch some basic rate tax payers.
• The annual pension allowance remains at £40,000 for the 2021/22 tax year. The lifetime allowance remains at £1,073,100 and will be frozen until 2026.
• You can once again save £20,000 into an ISA this year.
Of course, the start of the new tax year means the end of the old one so we can now start preparing self-assessment tax returns for the year ended 5th April 2021 – time to start collecting all that paperwork together (again)!