What’s the Tax Free Personal Allowance in the 2020-21 and 2021-22 Tax Year?
On the 6th of April each year the new tax changes come into effect and this is when you could see a changes to your tax free allowance. Regardless of your tax free allowance, there may be other factors that mean you’re eligible for a UK tax rebate. This could be due to a change due to your personal circumstances such as getting married, having children, mileage and many other work and personal related factors. You may have though that only self employed people can claim a tax rebate but that’s where you’re wrong. This guide outlines changes in the tax-free personal allowance and their impact on tax-related concerns, including the need to complete a tax return.
Table of contents
- UK Tax Free Personal Allowance Explained
- What dates does the UK tax year run from?
- UK Tax Free Personal Allowance for 2020-21 and 2021-2022 Tax Year
- New UK Tax Codes
- UK Tax Bands Change With the New Tax Year
- Getting Clear and Proper Advice on UK Tax
- How do you know if you’re owed a UK tax refund?
UK Tax Free Personal Allowance Explained
Your tax free personal allowance is the amount of tax that you can earn before income tax needs to be paid. The chancellor of the exchequer usually changes the amount in the budget each tax year when they set the annual budget. So, what you earn before taxes in the previous tax year may not be the same this year.
What dates does the UK tax year run from?
The UK tax year runs from the 6th of April to the 5th of April the following year. The current tax year is 2020-21 and the new tax year 2021-22 will begin on the 6th of April 2021.
UK Tax Free Personal Allowance for 2020-21 and 2021-2022 Tax Year
The personal allowance for the tax year 2020-21 is up to £12,500.
The higher rate threshold has also increased up to £50,000.
New UK Tax Codes
The change of personal allowance also means a change of tax code. HMRC will send you a P2 notice to inform you of the situation. 1250L is the new standard code. For the tax year 2021-22 The new tax code with be 1257L.
It is important to check the notice for accuracy. HMRC can make mistakes and your employer could end up paying the wrong tax.
For more information on tax codes and the latest rates for the current tax year visit gov.uk rates and tax thresholds for employers
UK Tax Bands Change With the New Tax Year
With the new tax year starting, figures for tax bands also change. Check out the below list of new income tax bands for 2021-22 that will come into effect on the 6th of April 2021.
UK Tax Bands For Personal Allowance
| Band | Taxable income | Tax rate |
|---|---|---|
| Personal Allowance | Up to £12,500 | 0% |
| Basic rate | £12,501 to £50,000 | 20% |
| Higher rate | £50,001 to £150,000 | 40% |
| Additional rate | over £150,000 |
Getting Clear and Proper Advice on UK Tax
With plenty of factors to consider before you can file UK tax returns, it is highly recommended that you speak to a tax accountant, our team has over two decades of experience and helped over 1 million customers secure tax refunds.
How do you know if you’re owed a UK tax refund?
Find out if you’re owed a tax refund today by filing a No-Refund No-fee PAYE tax rebate or a low rate Self Assessment tax return.
View our online UK Tax return forms
Contact our West London, UK based tax accountants