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You could earn a bit more without paying tax next year – find out how to do this.
When money’s tight, it can feel really hard to afford the essentials, like rent, energy bills or food shopping. In fact, if you’re having a really lean month, you might even find yourself cutting back on the basics.
But it doesn’t have to be this way – from next April, you could make an extra £2,000 a year in tax-free cash. You could rent out a room in your home or sell some of your old clothes online without paying any income tax, thanks to two new tax breaks. We’ll take you through how this will work.
Whenever you earn any money in the UK over a certain threshold, you’ll pay income tax. For the tax year 2016-17, this threshold is £10,600 for the majority of people. That means you can earn anything up to that amount without paying income tax and you’ll be taxed on any you earn. If you’re a basic rate taxpayer, you’ll pay 20% of everything you earn over the threshold.
But in the Chancellor’s Budget speech in March, we heard about two new tax breaks. These tax breaks will come into force in April 2017 and it means you will be able to earn more without paying income tax.
The first tax break is for trading income – that’s any products or goods you’re selling. If you’re creative and you make your own clothes, you could sell these online and, as long as you made less than £1,000 from this in a year, you wouldn’t pay any income tax on this. Or maybe you’re looking to pick up some gardening work around your local area – you could do this for a few hours here and there.
Think about what your skills are and how they could make you money – you might even be able to sell a few of your old DVDs or some furniture on eBay.
Airbnb tax break
On top of the £1,000 you can earn a year from trading income, you’ll also be able to bring in an extra £1,000 tax free from property income. That means that if you’re renting your room out to a lodger or you’re offering up part of your house for holidays, you could make money on this without paying income tax. Because of this, it’s been nicknamed the ‘Airbnb tax break’.
If you’ve got some space in your home that you’re not really using, this could be a great way to make some extra cash. You don’t even have to leave your home if you’re worried about guests breaking your property – if you’re in the house in the day time, you could offer up one of your rooms as office space.
What else could you earn?
The two tax breaks will come into force next April but you don’t have to wait until then if you want to make a bit of extra money now. Whether you want to tell your story, sell some stuff you don’t need any more or give your opinions, find out how you could boost your income in our blog.
If money’s tight, it’s also worth checking if you could get any money back that you might be owed. Check out our blog on reclaiming tax rebates for more tips on how you could do this.
by Emily BancroftBack to blog home