HMRC has released the latest information regarding Allowances and Tax Rebates.
Making the most of these allowances can give your finances a boost this year
The Stamp Duty holiday
The Stamp Duty holiday was introduced to boost the housing market after the initial lock down and had been due to conclude in March 2020. The Stamp Duty holiday has been extended for six months, meaning home buyers continue to pay no Stamp Duty on the first £500,000 of any transaction.
The allowance itself is unchanged in the new tax year at £20,000,
Personal savings allowance –
The personal allowance is how much you can earn each year before you start paying Income Tax. For 2021/22 this stands at £1,000.
Personal allowance –
Everyone enjoys a personal savings allowance, which covers the income that you can make from your savings each year without having to pay tax on those returns. For 2021/22 it is increasing from £12,500 to £12,570, which works out at £1,048 per month.
Rent a Room relief –
You can pocket £7,500 a year from rent before you have to start handing any over to the taxman.
Capital Gains Tax allowance
Capital Gains Tax has been under the spotlight, with the Treasury looking at ways it can be improved. Taxpayers have a £12,300 annual allowance covering the proceeds from sales of assets.
Dividend allowance –
Some stocks and shares that you invest in will pay you dividends ‒ effectively your share of their profits. The allowance is £2,000 for the 2021/22 tax year
Trading allowance –
If you’re looking for a bit of a side hustle, then you might want to trade items on sites like eBay and Etsy. You get a £1,000 annual allowance ‒ it’s only if you make more than that that you will have to start handing a portion over to the taxman.
Property allowance –
There are ways to make money from your property without taking in a lodger, for example by renting out some spare space as storage or by letting out your driveway. There’s a £1,000 annual property allowance before you start paying tax.
Working from home –
You can claim £6 per week, or you can try to claim the exact relief based on your spending, but you’ll need to be able to produce records to back this up.
Pension contributions –
The annual allowance for pension contributions is unchanged at £40,000 for 2021/22, while the lifetime allowance stands at £1.073m.
Inheritance Tax –
Estates have to pay 40% on their value above the £325,000 threshold (rising to £650,000 for couples), but making use of your annual gift allowances is one simple way to reduce your eventual tax bill.
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