It’s surprising how many couples don’t make use of the marriage allowance for Income Tax, according to tax experts.
State pensioners can get HMRC tax-free Personal Allowance boosted by over £8,000
Two HMRC allowances can boost state pensioners’ Personal Tax Free Allowance by over £8k. It’s surprising how many couples don’t make use of the marriage allowance for Income Tax, according to tax experts.
This allows you to transfer up to £1,260 of your personal allowance to your spouse. This can be useful, especially if one partner is a higher-rate taxpayer. In such instances, the allowance essentially raises the threshold at which the higher earner pays higher-rate Income Tax.
And the Rent-A-Room scheme is thousands too. If you rent out a room in your main residence to a lodger, you can earn tax-free rent up to £7,500. This is thanks to the government’s Rent-a-Room Scheme. Two things are worth noting, however.
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Firstly, if you share the income with someone else (e.g. your spouse), then you each get tax-free allowances of £3,750. Secondly, if you don’t otherwise have to complete a Self-Assessment Tax Return, you don’t need to complete one for income under these amounts.
The Rent-a-Room Scheme allows owner occupiers and tenants to receive tax-free rental income if you provide furnished accommodation in your only or main home.
For the tax year 2024 to 2025, the annual Rent-a-Room limit is £7,500. This reduces to £3,750 if someone else receives income from letting accommodation in the same property, such as a joint owner. The limit is the same even if you let accommodation for less than 12 months.
If your gross receipts from letting are not more than the Rent-a-Room limit of £7,500 (or £3,750), you do not pay tax on your profit. If they’re more than the limit, you may still be able to benefit under the Rent-a-Room Scheme.
Your gross receipts include:
- rental income (before expenses)
- any amounts you receive for meals, goods and services, such as cleaning or laundry
- any ‘balancing charges’
You usually count your gross receipts for a tax year — that’s, from 6 April one year to 5 April the next.
