What if you could live tax free?

With the right mix of income you could manage this quite legitimately.

Consider John and Mary, a couple in their 40s, during the 2019/20 tax year.

• John has a little trading income from cake making and Spanish tutoring, amounting to £1,000. Mary makes a little extra income through selling the surplus fruit and veg from their garden as part of the sharing economy, as well as the money they save as a result of her green fingers. They don’t have to submit accounts for this amount^*.
• They have both supported local artists by collecting oil paintings for a number of years but have now decided to clear out some of their extensive collection. The pieces they sell bring in £24,000 more than they originally paid. This is covered by their Annual capital gains tax allowance.
• They take in a lodger and earn £7,500 rent for the room between them and don’t even have to declare it to HMRC^*.
• Their investments bring in dividends of £2,000 each which is exempt from tax
• They both have part time jobs teaching Spanish and horticulture at the local college where they earn £8,632 each without paying tax or national insurance.
• They have some other income (not salary) of approximately £3,800 which takes them up to their personal allowance of £12,500 each for the year and this is not taxable.

This makes their total annual income:

£2,000 trading income
£4,000 dividend income
£7,500 rent a room income
£24,000 sale of capital items
£17, 264 salary (or other income)
£7,600 unearned income

£62,264 Total income which is tax free

^{*Although there is no requirement to submit details to HMRC we always recommend that you keep your own records and calculations to show that there is no tax payable.}