With the 2016/17 tax year only a few weeks old, there is still plenty of time for individuals to maximise the reliefs and allowances available to them. By doing this, an individual can receive a reasonable level income, before paying any income tax.
The majority of individuals will be entitled to receive £11,000 of income during the 2016/17 tax year before being subject to any income tax.
In addition to the standard personal allowance, an individual may also be able claim the marriage or blind-persons allowances.
Where an individual rents out a room or an entire floor of their own home, the first £7,500 received will be tax free.
This is then halved if you share the income with your partner or someone else.
If the income in respect of this is below £7,500, then no further action is required. Should your income exceed this amount, then a tax return will be required.
From 2016/17 the new dividend allowance has been introduced. This allows all individuals to receive their first £5,000 of dividends tax free. Any dividends received thereafter are taxed at either 7.5%, 32.5% or 38.1% depending on an individual's level of other income.
Personal savings allowance
Again, the personal savings allowance is a new allowance introduced in the 2016/17 tax year. Basic rate tax payers can received up to £1,000 of interest, before having to pay any tax on this, with higher rate tax payers receiving £500 of tax free interest. Additional rate tax payers will unfortunately not receive a benefit from this allowance.
As with many instances in tax, there are a number of complexities attached to the reliefs and allowances detailed above. To ensure that you are taking advantage of these when they are available, please contact your local Perrys branch.