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Budget 2021: Personal tax

Tax gulf widens for higher rate taxpayers

Income tax own pic

personal taxes here

The income tax threshold for higher earners has widened between England and Scotland after Mr Sunak lifted the 40p rate to £50,270.

Scottish Finance Secretary Kate Forbes has fixed the threshold north of the border at £43,662 and at 41p in the pound.

The personal allowance will rise by inflation to £12,570 north and south of the border.

Mr Sunak was expected to hit those paying capital gains tax but the annual exemption will remain at the current level of £12,300 over the same period and the pensions lifetime allowance will locked at the current level of £1.073 million too.

Likewise, the nil rate band for inheritance tax will stay at £325,000 where it has been trapped for over a decade, so really nothing new. There were no changes to ISA allowances, annual pension allowances and – for a change – no fiddling with Venture Capital Trust or Enterprise Investment Scheme rules either.

The point at which someone in England pays 40% income tax will have only increased by £6,395 in 15 years (or just over £400 per year).  With the effect of wage inflation, more people and families than ever will be dragged into 40% taxation.

Craig Alexander Rattray: Good news on capital gains and for entrepreneurs

Budget 2021 reports here

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