Small Business Accountants

What are the 2020/21 Income Tax & National Insurance rates?

A historical reference covering the 2021/22 UK income tax bands and National Insurance contribution rates. The Personal Allowance stood at £12,570, with basic rate tax at 20% on earnings up to £50,270. Class 2 NICs were £3.05 per week and Class 4 NICs applied at 9% between the Lower Profits Limit and Upper Profits Limit.

By Jordan Macey MAAT Reviewed by Noor Fiaz Updated 16 Apr 2026 1

Key takeaways

The 2021/22 Personal Allowance was £12,570, meaning no income tax applied on the first £12,570 of taxable income for most individuals in the UK.
Basic rate income tax of 20% applied to earnings between £12,571 and £50,270, with the higher rate of 40% covering income from £50,271 to £150,000.
The additional rate of 45% applied to all taxable income above £150,000, with no upper cap on the amount charged at this rate.
Self-employed individuals paid Class 2 NICs at £3.05 per week if profits exceeded the Small Profits Threshold of £6,515 for the 2021/22 tax year.
Class 4 NICs were charged at 9% on profits between £9,568 and £50,270, then at 2% on all profits above the Upper Profits Limit of £50,270.

The income tax rates, along with the Class 2 and Class 4 National Insurance rates for 2021/22 are as follows:

Small Profits Threshold: If you’re earning below the Small Profits Threshold, you’re not required to pay Class 2 NICs. But if you choose, you may pay Class 2 NICs voluntarily at the end of the tax year.

Lower Profits Limit: If you’re earning up to or below this limit, you’re only required to pay Class 2 NICs.

Upper Profits Limit: If you’re earning up to or below the Upper Profits Limit, you’ll need to pay Class 2 NICs, as well as Class 4 NICs (9%) on profits between the LPL and UPL.

If you’re earning above this limit, you’ll need to pay Class 2 NICs, Class 4 NICs (9%) on profits between the LPL and UPL, and Class 2 NICs (2%) on profits above the UPL.

Frequently asked questions

What was the Personal Allowance for the 2021/22 tax year?

The Personal Allowance for 2021/22 was £12,570. This meant most individuals could earn up to £12,570 before paying any income tax. The allowance was reduced by £1 for every £2 of income above £100,000, so it fell to zero once adjusted net income reached £125,140. Married couples and civil partners could also transfer up to £1,260 of unused allowance to a spouse through the Marriage Allowance.

What were the income tax bands and rates for 2021/22?

For 2021/22, the basic rate was 20% on taxable income from £12,571 to £50,270. The higher rate was 40% on income from £50,271 to £150,000. The additional rate was 45% on all income above £150,000. These thresholds applied to England, Wales and Northern Ireland. Scotland operated a slightly different set of bands with a starter rate of 19% and an intermediate rate of 21%.

How much were Class 2 National Insurance contributions in 2021/22?

Class 2 NICs for the 2021/22 tax year were a flat rate of £3.05 per week, collected through Self Assessment. Self-employed individuals had to pay Class 2 NICs if their annual profits exceeded the Small Profits Threshold of £6,515. Those earning below the threshold could still choose to pay voluntarily to protect their State Pension entitlement and access to certain contributory benefits.

What was the Class 4 NIC rate for self-employed workers in 2021/22?

Class 4 NICs for 2021/22 were charged at 9% on annual profits between £9,568 and £50,270. Profits above the Upper Profits Limit of £50,270 attracted a reduced rate of 2%. Class 4 contributions were calculated and paid through the Self Assessment tax return alongside income tax. Unlike Class 2, they did not count towards State Pension entitlement or benefit eligibility.

What was the difference between Class 2 and Class 4 NICs?

Class 2 NICs were a flat weekly charge of £3.05 that built entitlement to the State Pension and certain benefits such as Maternity Allowance. Class 4 NICs were a percentage-based charge on profits that did not count towards any benefit entitlement. Both applied to self-employed individuals and were collected through Self Assessment. Class 2 was mandatory above £6,515 profit, while Class 4 kicked in at the Lower Profits Limit of £9,568.

Did the 2021/22 income tax thresholds apply across the whole of the UK?

The Personal Allowance of £12,570 applied UK-wide, but income tax bands differed in Scotland. England, Wales and Northern Ireland shared the basic (20%), higher (40%) and additional (45%) rate structure. Scotland set its own bands including a starter rate of 19% on income from £12,571 to £14,667 and an intermediate rate of 21% from £14,668 to £25,296. All other Scottish rates and the top rate of 46% were set by the Scottish Parliament.

Were the 2021/22 NIC thresholds different from income tax thresholds?

Yes. The income tax Personal Allowance was £12,570, but the Class 4 NIC Lower Profits Limit was £9,568, meaning NICs started at a lower profit level than income tax. The Upper Profits Limit for Class 4 matched the higher rate threshold at £50,270, above which the NIC rate dropped to 2%. The Class 2 Small Profits Threshold sat even lower at £6,515. These mismatches meant self-employed individuals could owe NICs before owing any income tax.

Have these 2021/22 rates changed since then?

Yes, income tax and NIC rates have changed significantly since 2021/22. The additional rate threshold fell from £150,000 to £125,140 from April 2023. Class 2 NICs were effectively abolished for most self-employed workers from April 2024, and Class 4 NICs were reduced to 6% from April 2024. Current rates should always be checked on the HMRC website or with an accountant, as this article is a historical reference only.