Riski Sunak announced that Income Tax and National Insurance bands will rise in 2021-22 but then remain frozen until 2026. The personal and higher-rate income tax allowances, alongside National Insurance thresholds, will increase by 0.5%
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The value of investments, and the income from them, can go down as well as up, so you may get back less than you invest.
Between 2022 and 2026 taxpayers will not see any further rises, effectively introducing a gradual increase in tax assuming inflation is positive and average salaries rise, as the government tries to reduce the vast debt it has accumulated mostly due to the COVID-19 pandemic.
The 2021-22 personal allowance increase of £70 will be worth an extra £14 to a basic rate taxpayer and £28 to a higher rate taxpayer. Higher rate taxpayers further benefitting from an extra £40 due to the increase in the basic rate band.
Higher earners with a NET income over £300,000 have their pensions annual allowance tapered to £4,000.
For investors, the annual capital gains tax allowance (£12,300 for individuals, personal representatives, and some types of trusts and £6,150 for most trusts) is frozen until 2026.
Corporation tax, which is paid by UK businesses, will rise to 25% in 2023, in another bid to help reduce the UK’s debt. The Corporation tax rate has been 19% since April 2016.