Straipsniai
Find out how much you can earn before your income is taxed and the different types of tax breaks you can take advantage of to reduce your tax burden.
Do I always have to pay taxes on my income? Tax-free allowances reduce the amount of tax you have to pay on the income you receive. There are two types: tax-free minimum (allowance) means the amount of money you can earn before you have to pay taxes; the second (tax relief) means that you can claim certain general tax relief from all earned income.
| 2021 – 2022 | 2020 – 2021 | |
| Tax-free personal income | £12,570 (not applicable where income exceeds £100,000) | £12,500 (not applicable where income exceeds £100,000) |
| Basic rate tax paid (20%) | £1-37,700 (after tax-free income) | £1-37,500 (after tax-free income) |
| Higher rate taxpayer (40%) | Taxable income above £37,700 | Taxable income above £37,700 |
| Additional rate taxpayer (45%) | Taxable income above £150,00 | Taxable income above £150,00 |
| Tax-free income of a blind person | £2,520 | £2,520 |
| Capital gains tax threshold | £12,300 | £12,300 |
| Inheritance tax threshold | £325,000 + an additional £175,000 if the property includes a family home | £325,000 + an additional £175,000 if the property includes a family home |
Personal allowance of tax-free income in 2021-22
Most people are entitled to receive a certain amount of income and not pay tax on it. This is called non-taxable income. The tax-free rate for 2021-22 is £12,570. This tax-free minimum is the same for everyone, but it is reduced if you earn more than £100,000 a year. If you live in England, Wales, or Northern Ireland and earn between £12,570 and £50,270, you will pay a basic income tax rate of 20%. A higher rate is applicable, i.e. 40 percent income tax in England, Wales and Northern Ireland, from £50,270. It’s a little different in Scotland. Those earning between £12,570 and £14,667 will pay a basic income tax rate of 19%. Earnings between £14,667 and £25,296 will be calculated at a base rate of 20%. If you earn between £25,296 and £43,662, you will pay an intermediate rate of 21%. Those earning between £43,662 and £150,000 will pay a higher rate of 41%, while those earning over £150,000 will have to pay the highest tax rate of 46%.
Income over £100,000
If you earn more than £100,000, the tax-free allowance is reduced by £1 for every £2 you earn over £100,000, regardless of age. This means that if you earn £125,000 or more in 2021-22, the personal tax-free allowance will no longer apply to you and all your income will be taxed.
Marital tax relief
If you are married or in a partnership, you may be entitled to some tax relief. What it could be depends on when you and your partner were born and how much you earn.
One of you must be a non-taxpayer, which usually means that the person earns less than £12,750 a year and gets personal tax relief (2020/2021).
Income from savings
Each year, you are allowed to earn a certain amount of interest income on your bank savings. Basic rate taxpayers can earn up to £1,000 in interest for the 2021-22 financial year. Higher-rate taxpayers can earn up to £500 in interest for 2021-22. The tax-free minimum will not apply to the payers of the highest rate. This procedure remains unchanged from the 2020-21 tax year.
Dividend tax relief
The first £2,000 you receive from your investment is also tax-free (dividend relief). This procedure remains unchanged from the 2020-21 tax year. Incomes exceeding this amount are subject to a tax of 7.5% up to a 38.1% fee.
Tax relief for the visually impaired
If you, your spouse, or your registered partner are blind or severely visually impaired, your personal tax allowance increases. If you are both eligible for such relief, it will apply to both of you. In 2021-22, this additional relief is £2,520, so your total personal tax-free minimum will be £15,090. This is an increase on the £2,500 allowance in 2020-21. If you earn less than this amount, you can transfer any unused blind tax credit to your spouse or partner – this works in the same way as a marital tax credit.
England and Wales. If you live in England or Wales, you will need to have a visually impaired certificate and be on the local authority’s visually impaired register to get this benefit.
Scotland and Northern Ireland. If you are not officially recognized as visually impaired and live in Scotland or Northern Ireland, you will get relief if your sight is so bad that you cannot do any work where good sight is essential.
Unused difference. If your income is not sufficient to take advantage of the relief, you can transfer the unused difference to your spouse or registered partner.
Trade and property rental tax relief
If you make money from a trading activity – for example selling things on eBay or providing small freelance services – you can earn up to £1,000 in tax-free income. This is called “trade preference”. In addition, if you earn income from your property, you can also earn up to £1,000 in tax-free income. This can be useful if, for example, you are renting out your garden for an event or renting out a room for a week. But if you earn more than £1,000 from lettings, you’re better off using the Rent a Room program or paying tax as a rental business. Both benefits can be granted at the same time.
Tax relief for maintenance
You can also apply for tax relief for spousal or child support if: you or your partner were born before 6 April 1935; you maintain another person by court order after your relationship has ended; you are supporting your ex-spouse or partner (if they are not newly married or in a civil partnership), or your children who are under 21. Maintenance tax relief works similarly to marital tax relief. The value of the benefit is 10% of the total amount of maintenance you pay your ex-partner, but not more than £326 (10% of £3,260).
