Q: My income is close to hitting the tax-free personal allowance. Is there any way to increase it?
A: With the personal allowance threshold remaining frozen, more people are finding their income is exceeding it and becoming liable for tax. HMRC does have several rules you should make yourself aware of which allow you to legally increase the amount of tax-free income you can earn. They include:
- Marriage Allowance – worth £252 a year if one partner transfers their unused tax-free allowance to the other (who must be a basic-rate taxpayer)
- Trading allowance – worth £1,000 a year. You can earn this amount from side-hustles and/or selling unwanted items online
- Dividend Allowance – you can receive up to £500 in dividends per year, tax-free
- Savings Allowance – if your annual income is £12,570 or less, you can earn up to £5,000 from savings without paying tax on the interest
- Rent-a-room relief – you can earn up to £7,500 per year from renting a room in your home (you must also be living there)
