Are you claiming all of your personal tax allowances?

A key reason why many sole traders, landlords and others end up paying too much tax is they fail to claim all of the personal tax allowances they’re entitled to. Often it’s because they don’t know about them all – and no one tells them.

To help ensure that you claim all of your personal tax allowances, here are some key facts you should know, with a run down of the six most common personal tax allowances.

What is a personal tax allowance?

Personal tax allowances are sums that you are allowed to earn or receive in income without having to pay any tax. There are a few different types of personal tax allowance that are available to UK taxpayers.  

Who can claim personal tax allowances?

Some personal tax allowances are available to all UK taxpayers, while others aren’t. Depends what the income is, how much it is and the taxpayer’s personal circumstances. Potentially, all of the main personal tax allowances are available to UK sole traders and landlords.  

How can I find out about personal tax allowances?

You can find out for yourself or an adviser such as an accountant can tell you. HMRC will not tell you that you are entitled to claim a personal tax allowance, which is why it’s important to find out for yourself. The more the tax allowances and reliefs you claim, the lower your tax bill. So, what personal tax allowances might you be able to claim?

Personal tax allowance 1: Personal Allowance

The Personal Allowance is the amount of income that you can earn or receive before Income Tax is payable to HMRC. This applies whether you’re employed or self-employed. The standard annual Personal Allowance is £12,570 (2024/25 tax year). The Personal Allowance lessens by £1 for every £2 of income you receive over £100,000 and if your taxable income is £125,140 or more, you don’t get the Personal Allowance.

Personal tax allowance 2: Trading Allowance

The Trading Allowance is a tax exemption worth up to £1,000 a year if you earn income from self-employment, including occasional casual work (eg decorating, gardening, making cakes, fixing cars, teaching piano, etc). The Trading Allowance isn’t available to those who earn trading income from a company that they or someone they’re related to owns or controls. The income can’t come from your employer or the employer of your spouse or civil partner. Ordinary partnership members cannot claim the Trading Allowance either.

You can’t claim allowable expenses for things you buy for your sole trader business if you claim the Trading Allowance. So, if your business expenses are more than £1,000 in a tax year, you’d be better off claiming for them via your Self Assessment tax return, and not claiming the Trading Allowance.

Personal tax allowance 3: Property Allowance

Similarly, the Property Allowance is a £1,000 yearly tax exemption that’s available to landlords who earn taxable income from land or property they rent out. If you jointly own a property, all part owners can each claim the £1,000 Property Allowance against their rental income share. If you earn income from self-employment and land or property rental, you can claim the Trading Allowance and the Property Allowance.

Personal tax allowance 4: Dividend Allowance

If you own company shares and receive regular or occasional dividend payments, they can be taxable. If so, you can claim the tax-free Dividend Allowance, which is £500 for the 2024/25 tax year. You only pay tax on dividend payments above £500, providing your other taxable income is more than the Personal Allowance (£12,570 in the 2024/25 tax year).

Personal tax allowance 5: Marriage Allowance

If you’re married or in a civil partnership and your income is less than the standard Personal Allowance (£12,570 a year), you may be able to claim Marriage Allowance to reduce your spouse’s/partner’s tax (or vice versa). The Marriage Allowance allows you to transfer £1,260 of your Personal Allowance to your spouse or civil partner, which can reduce their tax by up to £250 in the tax year (or vice versa). The Marriage Allowance is not available to couples who live together but are not married or in a civil partnership.

Some other personal tax allowances

• If you or your spouse are registered blind you can claim the Blind Person’s Allowance, which could provide an extra £2,600 of tax-free income in 2024/25. Some of the allowance can be transferred to your spouse if you do not use it all yourself.
• If you pay the basic rate of Income Tax, the Personal Savings Allowance allows you up to £1,000 of tax-free interest. Higher rate Income Tax payers get £500 a year tax-free, but additional-rate Income Tax payers don’t get any tax-free allowance on savings interest.
• Those with a relatively low income but high-value savings may also qualify for the starting rate of savings, which offers up to £5,000 of tax-free interest. The more you earn from other sources (eg wages or pension), the less your starting rate for savings. You’re not eligible if your other income is £17,570 or more. And every £1 of other income above your Personal Allowance (£12,570) reduces your starting rate for savings by £1.

Using GoSimpleTax Self Assessment tax return-filing software can ensure that you claim all of the personal tax allowances, reliefs and expenses you’re entitled to. As well as preventing costly mistakes, it can also save you lots of time, effort and hassle. Treat yourself to a free trial and find out why thousands of sole traders, landlords and others love GoSimpleTax.

Blog content is for information purposes and over time may become outdated, although we do strive to keep it current. It's written to help you understand your Tax's and is not to be relied upon as professional accounting, tax and legal advice due to differences in everyone's circumstances. For additional help please contact our support team or HMRC.