Below is a list of tax free allowances that mean you can earn money without paying tax or even declaring it to the taxman.
You can earn income of £1,000 tax free, without even having to declare it to the taxman. If you earn more than £1,000, the allowance can be claimed as a deduction from your income in working out the taxable profit, rather than deducting your actual expenses.
You can also receive income from renting a property of up to £1,000 tax free and without having to tell the taxman. Where property income is more than £1,000, you can deduct this rather than actual costs when working out the profits for the property rental business if this is more beneficial.
Individuals get a personal allowance each year which is £12,500 for 2019/20. So from April 2019 you can earn £12,500 a year and pay no income tax.
Rent Out Your Spare Room
The rent a room scheme allows individuals to earn up to £7,500 tax free from letting a furnished room in their own home.
If you earn under around £50,000 in 2019/20, you’re entitled to a savings allowance of £1,000, while those earning over £50,000 benefit from a savings allowance of £500. Additional rate taxpayers do not get a savings allowance. ISAs provide the opportunity to earn further savings income tax free.
All taxpayers regardless of the rate at which they pay tax are entitled to a dividend allowance, set at £2,000 for both 2018/19 and 2019/20. This can be useful in extracting profits from a family company in a tax efficient manner.
Individuals can also sell a capital asset and pay no capital gains tax. The tax free amount for 2018/19 is £11,700 and £12,000 for 2019/20.
The above is only a small selection of the allowances available.