Tax Reliefs and Allowances
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.
Article written by Jamie Russell