Personal Taxation and Investments

Income tax

The personal allowance will rise to £12,570 and the higher rate threshold for 2021/22 will increase to £50,270, as previously announced. From 2022/23 to 2025/26, both the personal allowance and higher rate threshold will be frozen. In Scotland, the higher rate threshold for non-savings, non-dividend income will rise to £43,662 in 2021/22 as announced in the Scottish Budget.

National insurance contributions (NICs)

The NIC upper earnings limit and upper profits limit will remain aligned to the higher rate threshold at £50,270 for 2021/22 and through to 2025/26.

Taxation of payments under the self-employment income support scheme (SEISS)

Grants from the SEISS made on or after 6 April 2021 will be taxed in the year of receipt regardless of the accounting year end. Legislation in the Finance Bill will ensure this measure has effect for the tax year 2020/21 and for subsequent tax years.

Income tax exemption for employer-reimbursed COVID-19 tests

There will be an income tax exemption for payments that an employer makes to an employee to reimburse the cost of a relevant coronavirus antigen test in 2020/21 (retrospectively) and 2021/22. The corresponding NIC disregard is already in force for 2020/21 and will be extended to 2021/22.

Easement for employer-provided bicycles exemption

There will be a time-limited easement to the employer-provided cycle exemption to remove the requirement that employer provided cycles be used mainly for journeys to, from or during work. The easement will be available to employees who have joined a scheme and have been provided with a cycle or cycling equipment on or before 20 December 2020. The easement will remain in force until 5 April 2022.

Mortgage guarantee scheme

A new residential mortgage guarantee scheme will run from April 2021 to December 2022, aimed at increasing availability of 91% to 95% loan-to-value mortgages. The maximum property value will be £600,000 and mortgages must be arranged on a repayment basis.

Extension of social investment tax relief (SITR)

The government will extend the operation of SITR to April 2023.

Individual savings account (ISA) subscription limits

The ISA annual subscription limit for 2021/22 will remain at £20,000 and the corresponding limit for junior ISAs (JISAs) and child trust funds (CTFs) will stay at £9,000.

Green National Savings & Investments (NS&I) product

NS&I will offer a green retail savings product in summer 2021. It will be closely linked to the UK's sovereign green bond framework, details of which are to be published in June 2021. The first green gilt will also be issued this summer.

Lifetime allowance

The lifetime allowance for pension savings will be frozen at £1,073,100 until April 2026.

Taxation of collective money purchase pensions

Legislation will ensure that collective money purchase pension schemes can operate as registered pension schemes for tax purposes. These are also known as collective defined contribution schemes (CDCs), to be introduced by the Pension Schemes Act 2021.