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Tax-free income

Tax-free income is income you earn but don’t have to pay tax on.

Examples of tax-free income:

  • your first £12,500 that you earn in a tax year – this is called the Personal Allowance and every UK taxpayer gets it automatically
  • if you’re self-employed, your first £1,000 from self-employment is also tax-free (this is called the Trading Allowance and it is on top of the Personal Allowance)
  • if you’re a live-in landlord, your first £7,500 is tax-free (the “Rent a Room allowance”)
  • if you earn dividends, your first £2,000 from dividends is also tax-free
  • you can see a longer list of these tax-free allowances here.

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