Do you dream of earning thousands without the taxman getting his mitts on it? I’m not suggesting you take up correspondence with a Panamanian law firm, but you simply need to make the most of your tax-free allowances.
This tax year you can earn £30,600 tax-free as follows:
- £11,000 from the standard personal allowance* for income.
- £7,500 from renting a room in your home.
- £11,100 from capital gains made from selling items such as personal possessions or second homes that have increased in value.
- £1,000 worth of savings interest.
From 6 April 2017, the personal allowance will rise to £11,500. From this date you will also have £2,000 in additional tax-free income allowances that were announced in the March Budget.
You’ll be able to earn up to £1,000 a year from property income – such as renting your home or parking space, or a buy-to-let property – as well as an extra £1,000 a year from income for occasional jobs – such as babysitting, tutoring, or selling crafts – completely tax-free.
How the new £1,000 allowances will work
The new allowances will be applied before you use your 2017/18 tax-free personal allowance of £11,500. In effect, this means you can earn up to £13,500 income from April 2017 before paying tax.
The savings interest and capital gains allowances can be added to this. You can use the rent-a-room allowance and the new property allowance on different income – for example, if you have a lodger and you also rent out your parking space but you can’t use it on the same income.
There are also a few other caveats. Someone renting out their entire home is not eligible for the rent-a-room relief – they can only claim the property allowance. If you use these two optional allowances, you can’t claim expenses on that income.This means buy-to-let property owners, in particular, should calculate the cost of any expenses they can reclaim (for example, letting agent fees, maintenance costs, service charges), as they could earn more in expenses than they would from the £1,000 tax-free allowance.
If you’ve made money and you’re unsure if it needs to be declared, get in touch with HMRC as soon as possible on 0300 200 3300.
Boost your income
You don’t need to wait until next April to boost your earnings. Moneywise has compiled eight easy ways for you to earn an extra £1,000 this year.
1. Sell arts and crafts, as well as unwanted junk
Enjoy knitting, painting, making jewellery or other crafts? Sell your wares at local craft fairs and markets or on craft websites, such as Etsy.co.uk and Folksy.com.
Just ensure the cost of making goods doesn’t outweigh the amount you sell them for and check if there is a fee to sell your items – Etsy and Folksy both charge listing fees and take a percentage of the sale.
Alternatively, sell anything from old clothes and children’s toys to furniture using eBay or Facebook. It’s free to sell on Facebook, while on eBay you can list 20 items for free each month (35p per item afterwards), but the e-tailer does take 10% of any sale.
If you’re not keen on selling online, sell at car boot sales instead. Carbootjunction.com lists sales in your local area and tells you if there’s a fee per car – usually £5 to £10.
Average earnings: Folsky says its top 200 sellers make £2,500 a year on average.
2. Complete online surveys
YouGov pays members 25 to 50 points per survey, which you can redeem for £50 once you’ve accrued 5,000 points - so after around 100 to 200 surveys. These take between five and seven minutes to complete.
Average earnings: 50p to £1 per survey.
3. Become a mystery shopper
MarketForce.com pays you to eat and shop for free in return for a review of the company’s services. Assignments typically pay £5 to £10 along with reimbursement of any purchases you have to make.
There’s no limit on how many assignments you can do.
Average earnings: £260 a year based on carrying out one assignment a week.
4. Get free cash for switching banks
You can earn £100 just by switching your current account. See Moneywise.co.uk for best buys.
Average earnings: Three major banks pay £100 to switch, so get £300 if you switch three times.
5. Rent your room, home and parking space
If you’re looking for a lodger, you can advertise it for free on sites such as SpareRoom.co.uk. Or if you’re planning to rent your room, or even your entire house on a short-term basis, Airbnb.co.uk is a popular site for holidaymakers to advertise their homes – it takes 3% of what you make. In addition, if you live near an airport or key amenities and attractions, consider renting your car parking space. JustPark.com is free to list your space on.
Average earnings: £5,088 a year (£8,496 in London) is the average UK lodger rent including bills, according to SpareRoom. JustPark users typically make £500 a year.
6. Cash in on unwanted gadgets
MobileValuer.com tells you where you’ll get the most money for old mobiles, iPods, tablets and laptops – at the time of writing, you could get £261 for a working iPhone 6 16GB, for example.
Sites such as MusicMagpie.co.uk buy old CDs, DVDs, games and electronics – although you’ll need to have a minimum of £5 worth of goods. When we tapped in the barcode on Adele’s new album, 25, for example, the site said it would pay £2.40 for it.
Average earnings: £200 a year based on the average MusicMagpie order value of £54 and the fact people tend to trade three or four times a year.
7. Become a micro-tasker
Free-to-join site TaskRabbit.co.uk enables you to list services, such as odd jobs and cleaning, at an hourly rate – it takes 30% from the first task and 15% thereafter. Similarily, earn points for fitness-related tasks, such as going to the gym and even just walking, via free-to-join website and app Bounts.
You can then redeem points for gift vouchers at high-street retailers.
Average earnings: £48,000 a year is the top earning potential of full-time TaskRabbit users, while Bounts users can earn at least £15 to £20 a year.
Moneywise readers can use the code MW200 when they join Bounts online or via its app (not via Facebook) before 31 May 2016 to get 200 free points when you complete your first activity. These will be automatically credited after your account is validated. (New Bounts users only.)
8. Earn cashback when you shop
Whatever you’re buying online, be it clothes, flights, hotels, or even mobile phone and broadband contracts, once you’ve found the cheapest deal, check if you can earn cashback.
Quidco.com and TopCashback. co.uk are both free to join if you opt for their standard memberships.
Average earnings: £325 a year via TopCashback.
*Your personal allowance may be bigger if you claim marriage allowance or blind person’s allowance. It will be smaller if your income is more than £100,0000 a year.