We have worked out that you could earn income of up to £21,040 tax free for the tax year 2018/19. You could also take advantage of another £21,200 tax free allowances and reliefs.
Here’s how you can maximise your tax-free earnings:
Each year, you are able to earn a certain amount tax-free by taking advantage of allowances. These are:
- £11,850 Personal Allowance – This is how much you can earn per year without being charged any tax.
- £2,000 Dividends – This is a part of your income if you have invested in company shares.
- £6,000 Interest from Savings – This is a combination of the £5,000 savings starter-rate allowance and the £1,000 personal savings allowance.
- £1,190 Marriage Allowance – This applies where one partner earns less than the personal allowance and transfers 10% of it to their partner. The higher earning spouse must be a basic-rate taxpayer.
If you buy, sell or rent anything of value, you can also use other allowances. These are:
- £11,700 Capital Gains Allowance – This is the tax-free profit you can make from selling valuable possessions like shares and properties.
- £7,500 Rent-A-Room Scheme – This is the amount you can earn tax-free if you rent a room within your property.
- £1,000 Trading Allowance – This is the tax-free allowance available if you earn money from buying and selling low value items such as auctioning an item on eBay or creating crafts to sell on Etsy.
- £1,000 Property Allowance – This allowance is used if you make money from renting out your property in a low cost way. For example, renting your driveway for parking or allowing your property to be used by film crews. You can’t claim this in addition to the Rent-A-Room allowance.
So challenge yourself using the above to see how much you can earn tax free !