In this section...

Tax Bands for 2021/22 and 2022/23

Tax Bands for 2021/22 and 2022/23

Posted 07/04/2022

The 2021/22 Tax Year has now finished and from the end of April/beginning of May you may expect some people to start saying that they are working on their Tax Returns ahead of the January deadline. This article outlines the tax bands and calculations for the 2021/22 so you can estimate which tax band you fall into, and the 2022/23 tax bands so you can plan ahead for the new Tax Year we have entered.

Personal Allowance:
2021/22 £12,570
2022/23 £12,570
The tax rates below are for income after the personal allowance has been deducted. The personal allowance is the amount of income an individual in the UK can earn tax-free. Tax is applied to earnings above this amount.

Scottish Tax Bands:
TAX BAND RATE 2021/22 2022/23
STARTER RATE 19% £12,571-£14,667 £12,571-£14,732
BASIC RATE 20% £14,668-£25,296 £14,733-£25,688
INTERMEDIATE RATE 21% £25,297-£43,662 £25,689-£43,662
HIGHER RATE 41% £43,663-£150,000 £43,663-£150,000
TOP RATE 46% Over £150,000 Over £150,000

England, Northern Ireland and Wales Tax Bands:
TAX BAND RATE 2021/22 2022/23
BASIC RATE 20% £12,571-£37,700 £12,571-£50,270
HIGHER RATE 40% £37,701-£150,000 £50,271-£150,000
TOP RATE 45% Over £150,000 Over £150,000

There are separate rates, allowances and bands for Capital Gains Tax and National Insurance.
When being taxed on dividend income, individuals are granted £2,000 as a tax-free amount for the 2021/22 and 2022/23 tax years each. After that, depending on the band the individual falls under, tax is applied.
For the 2021/22 Tax Year, the rates at which dividend income was taxed had not changed. Dividend income in the Basic Rate Band was taxed at 7.5%, 32.5% at Higher Rate and 38.1% at the Top Rate. For the 2022/23 Tax Year, the rates at which dividend income is taxed at have changed. The Basic Rate is now 8.75%, The Higher Rate is 33.75% and the Top Rate is now 39.35%. This will affect Tax Returns that are due before the 31st January 2024.
Dividend income tax is calculated after all other income tax has been calculated. Employment income is taxed first, followed by self-employment and rental income and then bank and savings income. Therefore, if an individual earns £40,000 employment income and £5,000 dividend income living in England in the 2022/23 Tax Year, £27,430 (£40,000 - £12,570) of employment income will be taxed at 20% and £3,000 (£5,000 - £2,000) of the dividend income will be taxed at

Tags: personal tax, self-assessment tax, self-assessment, tax returns

Need help?

Get in touch and see how we can help you