Tax question
New to freelancing here, trying to figure something out. Do you get the £12,500 tax free for each tax year or just the once? For example I started freelancing in September 2020 does that mean whatever earning I made from then till April 2021 minus that, correct?
Then from April 21 till April 22 is that another -£12,500 from my earnings? It sounds right, but doubting myself here.
Any help appreciated. Solo trader here, doing my own self assessment.
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- @Rashpal Gurm This is amazing, thank you for the super informative reply. I have no need to become a Ltd yet, so trying to keep it simple for myself
- Hey @Luana D'Elias Thomas !Yes that should be correct.Last year's tax year was April 6th 2020 - April 5th 2021.The threshold for that year was £12,500, with a standard tax code of '1250L'The current tax year is April 6th 2021 - April 5th 2022, with a threshold of £12,570, and a standard tax code of '1257L'.That means there was an increase of £70 of tax free income from last year.Here is a breakdown of this years tax thresholds taken from https://www.gov.uk/income-tax-rates :Personal Allowance Up to £12,570 0%Basic rate £12,571 to £50,270 20%Higher rate £50,271 to £150,000 40%Additional rate over £150,000 45%Hope that formats correctTax can be difficult but once you get your head around it you should be good. Its the coroporation tax for Limiteds that complicated.ThanksRash
- Yes, that’s your yearly tax free allowance. Keep an eye on the budget every year to see if it changes
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