Full list of tax-free allowances to max out before April

With the end of the tax year around the corner in April, now is as good a time as any to check you’ve made the most of your tax-free allowances – particularly as the government is raking in billions of pounds extra in taxes.

We’ve rounded up the key tax allowances you should know about…

Remember your personal savings allowance

Basic-rate taxpayers can earn up to £1,000 in interest tax-free, while higher-rate taxpayers can earn up to £500, through regular savings accounts. Additional-rate taxpayers unfortunately don’t get any allowance.

If you’re avoiding savings accounts because you’re worried about paying tax, it’s worth bearing these allowances in mind. You would need to save a significant amount to earn enough interest to breach these thresholds.

Max out your ISAs

You can currently deposit up to £20,000 per year into ISAs (‘stocks and shares’ or ‘cash’). A cash ISA lets you put cash in and receive interest tax-free, while with a stocks and shares ISA, the money is invested and your returns are tax-free.

There is also the ‘Lifetime ISA’, where you can contribute up to £4,000 per year and receive a 25% government top-up.

You can contribute to different types of ISA throughout the year, but can only invest a combined £20,000 per year across them.

It’s worth putting money into ISAs before using taxable accounts like savings accounts or general investment accounts.

Increase your pension contributions

You get ‘tax relief’ on any money you put into your pension. This is where the government refunds tax you would have paid on your income and adds it to your pension instead.

The Government adds a 25 per cent top up to your pension contributions, so for every £100 you pay in, you get an extra £25. This increases if you are a higher or additional rate earner, and will equate to more free cash if you contribute more.

If you choose to save elsewhere intead of in your pension, you are effectively missing out on this free cash.

You also get contributions from your employer if you contribute to a workplace pension, so you’re losing out on those if you don’t pay into a pension at all.

Take advantage of the trading allowance

You can earn up to £1,000 tax-free from a side-hustle or hobby. For example, if you flog clothes on Vinted or eBay, the first £1k of earnings will be tax-free.

Put money into Premium Bonds

If you’ve used up your ISA allowance and are looking for a tax-free savings vehicle, you could consider Premium Bonds. These are backed by the government, and while you don’t earn interest, your ‘bonds’ are put into a prize draw. Any prizes you earn are tax-free.