As we move deeper into the 2024/25 tax year, now is the perfect time to assess how you can take advantage of personal tax allowances to save money. These allowances enable you to earn a portion of your income tax-free, yet many people aren’t fully aware of the opportunities they provide. Whether you’re self-employed, a landlord, or simply looking to make the most of your financial situation, understanding these allowances can significantly improve your tax efficiency. Let’s explore what’s available this year and how you can benefit.
What Are Personal Tax Allowances?
Personal tax allowances are specific amounts of income that you can earn without paying tax. They vary depending on your circumstances, the type of income you receive, and your eligibility. By identifying and applying these allowances effectively, you can reduce your tax liabilities and keep more of your income.
Key Personal Tax Allowances for 2024/25
- Personal Allowance
This is the foundational tax-free threshold. For the 2024/25 tax year, the standard Personal Allowance remains £12,570. However, if your total income exceeds £100,000, this allowance decreases by £1 for every £2 you earn above that threshold, disappearing entirely at £125,140. - Trading Allowance
Self-employed individuals or those earning casual income from small-scale trading can benefit from a £1,000 tax exemption. This is ideal for side hustles or occasional freelance work. - Property Allowance
If you earn rental income, the first £1,000 is tax-free. This allowance is especially helpful for small-scale landlords or those letting out a single property. - Dividend Allowance
For those receiving dividends from investments, the first £500 is tax-free this year. While this amount has decreased in recent years, it’s still a valuable benefit for shareholders. - Marriage Allowance
Couples can optimise their tax position by transferring 10% of the lower-earning partner’s Personal Allowance to the higher-earning partner. This can result in a tax saving of up to £252 if eligibility criteria are met. - Blind Person’s Allowance
Individuals who are registered blind or severely sight-impaired can claim an additional allowance of £3,070, which increases their tax-free income threshold.
Why Act Now?
We’re well into the tax year, meaning it’s an ideal time to evaluate your finances and ensure you’re on track to claim all the allowances you’re entitled to. Waiting until the end of the year could mean missing out on opportunities to reduce your tax burden or plan effectively for the future.
How to Maximise Your Allowances
Stay Organised: Keep detailed records of your income and expenses to ensure nothing is overlooked when claiming allowances.
Review Regularly: As your financial circumstances change, so might your eligibility for certain allowances. Periodic reviews are key.
Seek Expert Advice: Consulting a tax professional can help you identify allowances you might not have considered and ensure you’re maximising your entitlements.
Start Saving Today
Taking control of your personal tax allowances isn’t just about saving money—it’s about making informed decisions that can positively impact your financial future. There’s still time this tax year to make adjustments, claim allowances, and ensure your finances are working as hard as you do.
Don’t leave your tax savings on the table. Start exploring your options today and set yourself up for a more financially secure year ahead!