Tax-free Personal Allowance will rise to £20,070 due to HMRC rule
The new tax year is only a few months old, and with it comes a reset of various limits and allowances, which can be earned again. And for savvy households, squeezed for every penny for another 12-month period. The tax-free Personal Allowance has been frozen again by the Government, with its current cap on the threshold since 2021 now due to extend all the way to 2031, a full decade without any rises to keep pace with inflation.
TL;DR
- The UK's Personal Allowance for income tax has been frozen until 2031, with the standard limit at £12,570.
- A "rent-a-room" scheme allows individuals to earn up to £7,500 annually from renting out a room in their home tax-free.
- This scheme can legally boost a taxpayer's effective Personal Allowance to £20,070.
- The rent-a-room allowance applies to furnished rooms within one's primary residence and is also available for some B&B or guest house operations.
- If earnings from renting a room are below the £7,500 threshold, no tax return is typically required; otherwise, a self-assessment tax return must be filed.