Spring Budget 2021: No personal tax rate changes, but allowances to be frozen

Instead, we’ve seen a freeze on many of the usual increases expected in the allowances for taxes that affect individuals.

The Chancellor announced that the income tax personal will increase to £12,570 as promised next year, but will then be frozen until 2026. The basic rate limit for each of the years 2022/23 to 2025/26 will be set at £37,700, meaning the higher rate threshold for those years will be £50,270 for those entitled to the full personal allowance. 

The annual exemption from  capital gains tax will remain at £12,300 for individuals (and £6,150 for most trusts) until 2026.  The Inheritance Tax nil rate band and residence nil rate bands will also remain at their current levels of £325,000 and £175,000 until 2026, with the residence nil rate band tapering as currently.

Whilst tax relief on pension contributions was not addressed by the Chancellor, the lifetime allowance will be frozen at its current level of £1,073,100 until April 2026.

Capital gains tax is not part of the triple tax lock and is a hot topic – rate changes in the future cannot be ruled out.