Expected Changes – Income Tax Personal Allowance, National Insurance Limits for 2020- 21
Expected Changes – Income Tax Personal Allowance, National Insurance Limits for 2020-21 & Spending Review
Government is indicating raising the income tax threshold, the default position is that allowances are uprated in line with September’s Consumer Price Index (CPI). The annual CPI increase to September 2020 was 0.5%.
Income tax personal allowance
When increasing the Income tax personal allowance, the increase is rounded up to the next £10. This means that the personal allowance for 2021/22 should be £12,570 (up from £12,500 in 2020/21).
Income tax basic rate limit
The basic rate limit is always a multiple of £100, and when the limit is increased, the legislation allows for the limit to be rounded up to the next £100). This means that the basic rate limit for 2021/22 should be £37,700 (up from £37,500 in 2020/21).
The Spending Review also confirmed that the government will also use the September CPI figure as the basis for setting all national insurance limits and thresholds, and the rates of class 2 and 3 national insurance contributions for 2021/22.
. Review Stresses economic emergency
. Ambitious plan for a good job’s recovery with employment support and training to help people take up new opportunities
. Deliver a leveling-up strategy that targets places where employment and pay are low to support local economic growth, spending £14billion over three years on the Shared Prosperity Fund
. Build more genuinely affordable housing to help close the affordability gap and prevent homelessness.
. The chancellor confirms £3bn for a three-year Restart programme to help a million people who have been unemployed for over a year to find jobs
. The national living wage will rise by 2.2% to £8.91 per hour and will be extended to those aged 23 and over.
. For a full-time worker on the national living wage, that is an increase of £345 next year
. The national minimum wage will also increase.