Tax allowances 2021/22 (tax year ending 5^th April 2022)

January to March is a key period in the year to review your income, to ensure you have utilised any allowances available to you. With some careful planning you can also save tax too!

• Personal allowance £12,570 (this is your tax-free allowance for the year)
• Marriage allowance – if you or your partner do not use up their personal allowance in a tax year, and neither of you are higher rate taxpayers (over £50k), up to £1,250 of the unused personal allowance can be transferred to the tax paying partner, saving up to £252 in tax. If you haven’t claimed before you could claim for the previous four years!
• Married couples’ allowance– This can reduce your tax bill by between £353 – £912.50 per year if you were born before 06/04/1935.
• Personal savings allowance – you can generate bank/savings/lending interest in a year and not pay tax on this income based on the following criteria: £5000 tax free interest income (starting rate)– if your other income (incl. wages and pension) is £12,500 or less. £1000 (basic rate) tax free interest income– if you are a basic rate taxpayer (income between £12.500 – £50,000), this is on top of the starting rate if it applies to you. £500 tax free interest income (higher rate) (£50k – £150k)– if you are a higher rate taxpayer. .
• Dividend allowance – currently £2,000 per taxpayer.
• Blind person’s allowance – If you or your partner are blind or have severely impaired sight your personal allowance is increased from £12,500 to £15,020.
• Trading allowance – you can make £1,000 tax free in a year before needing to pay tax on your trading income.
• Property allowance – again you can earn £1,000 from renting out property before paying tax. (You can claim both trading and property allowance in one year if applicable).
• Capital gains tax threshold – you can make gains on assets sold in a tax year of £12,300 before paying tax. It is worth remembering this if you have shares and require some additional income, as you can sell shares to the value of the allowance without paying tax.
• Pension allowance – £40,000 allowance per year can be contributed to your pension scheme. This may be lower if you have started to access your pension, or if you are a high earner. There is also the opportunity to claim carry back for the 3 previous years, if you have used your full allowance in 2021/22 and have unused allowances in prior years.

If you would like help understanding your tax position, or claiming allowances through your self-assessment tax return, please get in touch.