What is tax free these days
Surprisingly, there is quite a lot. As long as you are resident in the UK for tax purposes you will probably qualify for the following tax reliefs and allowances for the 2017-18 tax year:
- The first £11,500 of your personal taxable income is free of income tax, although you will pay 12% NIC on earnings above £8,164 per year.
- The first £5,000 of dividend income is tax free.
- The first £11,300 of capital gains are also tax free.
- There are various savings allowances that you may be able to claim.
Apart from these basic allowances, there are a number of income types and gains that are exempt from income tax and capital gains tax. Currently, they include:
Tax-free capital gains:
- Gifts to your spouse, a civil partner or a charity
- Gains when cashing in ISAs or PEPs.
- Sale of government gilts and premium bonds
- Betting lottery or pools winnings
- Any profit on the sale of your car, unless you have used it in a business
- Any personal assets that have a limited lifespan, less than 50 years, and the sale proceeds are below £6,000.
- In most cases, the sale of your own home
Also, when you inherit an asset, any inheritance tax is usually paid by the estate. So you will get the use of the asset tax free, but you may have to pay capital gains tax if you subsequently sell it.
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