Low earners are facing the brunt of a stealth tax raid, with frozen income tax thresholds dragging more people into higher tax brackets as wages rise. Despite a recent cut to National Insurance rates, households are set to pay a record amount this year.
Marriage allowance
Low-earning couples who are married could save £252 a year with the marriage allowance, allowing one partner to share ten per cent of their tax-free personal allowance with the other. Two million couples are missing out on this perk.
Tax-free childcare
Families can claim up to £2,000 per child under 11 for childcare costs each year, on top of the 30 hours of free childcare if eligible. The allowance can be doubled for parents with a disabled child.
Trading allowance
Savvy sellers can earn up to £1,000 a year tax-free with the trading allowance, potentially saving basic-rate taxpayers up to £200 annually. This allowance is great for those doing side gigs like babysitting or selling items.
Rent out your home or driveway
Earn up to £1,000 tax-free by renting out your property, whether it's your driveway or your home on Airbnb while you're away. This allowance could save you £200 a year in taxes.
Savings allowance
If you earn between £12,570 to £17,570, you could earn up to £5,000 interest on your savings tax-free, potentially saving you £1,000. Higher rates on savings mean more people are breaching the threshold.
Pensions allowance
Pensions provide excellent tax breaks while boosting retirement savings. For basic-rate taxpayers, putting money into your pension pot means you get £1 back for every 80p you contribute. You can contribute up to £60,000 a year tax-free.
‘I saved £252 with my tax return’
Zita Wells, a 54-year-old dog-walker from East Sussex, saved £252 by claiming the marriage allowance after hearing about it on TV. Her husband's low income allowed her to claim ten per cent of his personal allowance.
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