The short version: Tax-free income is money you receive that you don’t have to pay tax on. Various allowances and exemptions mean some of what you earn stays completely out of HMRC’s reach.
What counts as tax-free?
Income up to your Personal Allowance. Self employment income up to the Trading Allowance. Rental income up to the Property Allowance (or Rent a Room limit if you’re a live-in landlord). Savings interest up to your Personal Savings Allowance. Dividends up to the Dividend Allowance. ISA returns. Many state benefits.
Do you need to declare it?
Often no. If your only income is below the relevant allowances, you don’t need to file a return. But if you have income above the thresholds, you may need to report everything, even the tax-free portions.
Can tax-free status change?
Yes. Allowances can change in budgets. Income that’s tax-free at one level might not be if your circumstances change. Stay informed.
Not sure what’s tax-free in your situation? We can help you understand your position.
