We are now in another tax year, here is a reminder of your annual free allowances.
Personal allowance – this is still frozen at £12,570. You pay no tax on income in your personal allowance band.
Rent-a-room relief – you can rent a room in your home while you are still living in it. The annual tax-free allowance is £7,500.
Property allowance – if you do not have many expenses to deduct from your rental property, this allowance can be used. The annual allowance is £1,000.
Trading allowance – if you want to earn some additional income free of tax, this is a great allowance to use. You can earn an income of up to the trading allowance. The annual tax-free allowance is £1,000.
Saving allowance – this is based on the interest you can earn. The allowances and rates are dependent on your personal income tax band. The annual allowances are: £1,000 for basic rate taxpayers, £500 for higher rate taxpayers, £0 for additional rate taxpayers.
Dividend allowance – £500 is the total amount of dividends you can receive tax-free in a year.
Capital gains tax – the annual allowance is for all gains added together, no matter how the gain is made. The annual allowance is £3,000.
Pension contributions – the annual allowance is £60,000, however this may be reduced due to your high income or other restrictions. If your allowance is reduced, it may go down to £10,000.
ISA allowance – you can invest up to £20,000 in an ISA. This allowance includes all contributions made to a cash or a stocks and shares ISA.
You may want to assess your finances each year in order to maximise your tax-free allowances.
Please always seek professional advice before taking any action. We are happy to answer questions in future issues. Please send your questions through the contact us page on our website: www.champconsultants.co.uk
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