Households can increase tax-free allowance to £18,570

Households may increase their tax-free Personal Allowance to £18,570 using a loophole from HMRC. Typically, the Personal Allowance is £12,570, but the Starting Rate for Savings allows an additional £5,000 tax-free for those earning under £18,570. Individuals earning less than £12,570 from work or pensions can benefit fully from this allowance. They can also add another £1,000 from the Personal Savings Allowance, making their total tax-free earnings from savings interest potentially £18,570. Those earning above £12,570 will see a reduction in their Starting Rate for Savings. If tax has already been paid on savings income, individuals can reclaim it through a Self Assessment Tax Return for the past four years.