Increase tax-free Personal Allowance to £13,006 with little-known HMRC rule

Brits have been told how to increase their  tax-free personal allowance  to over £13,000 by using one little-known method. ‘Tax relief’ means that you either pay less tax to take account of money you’ve spent on specific things, like business expenses if you’re self-employed, or get tax back or repaid in another way, like into a personal pension. 

Maintenance Payments Relief is one form of tax relief and it reduces your Income Tax if you make maintenance payments to an ex-spouse or civil partner. You can get it if either of you were born before April 6, 1935, you’re paying maintenance under a court order after the relationship has ended, and the payments are for the maintenance of your ex-spouse or former civil partner (provided they are not now remarried or in a new civil partnership) or for your children who are under 21.

Maintenance Payments Relief is worth 10% of the maintenance you pay to your ex-spouse or civil partner, up to a maximum of £436 a year (or 10% of £4,360). The standard Personal Allowance is £12,570, which is the amount of income you do not have to pay tax on. With the maximum Maintenance Payments Relief, the tax-free personal allowance to £13,006.

This isn’t the only way to reduce your tax bill. Each year, Brits can pay up to £40,000 into their pension without incurring tax.

This is deducted from someone’s gross pay, so the Government will either top up their net pay payments that have been made into their pension, or they will take it directly from the gross pay from their employer.

Another way people can save money on taxes is by checking if they are entitled to any tax credits. Many people don’t realise they qualify for Working Tax Credit and Child Benefit.

Payments will depend on an individual's income and the number of hours they work. Those on low incomes, or who have disabilities, should keep up to date with all the benefits that they are entitled to based on their working hours and the amount of money they earn.

A portion of the Personal Allowance can be transferred between spouses and civil partners via the Marriage Allowance. If someone earns much less than their partner, they can check if they’re eligible.

This basically means you can give up to about £1000 to your partner of your Personal Allowance. It allows them to earn up to £1,250 on top of their Personal Allowance before they hit additional tax to be paid.