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Boost your family income

For normal, working families, it can sometimes feel like there’s not that much to get excited about when it comes to taxes. Certainly, the last budget didn’t give families a lot in the way of financial relief. There wasn’t even a whiff of the expected increase in the tax free personal allowance - £12,500 by 2020 according to the Tory party manifesto. Yeah. Not so encouraging.

The Resolution Foundation, a thinktank that works to improve living standards, estimates that there are around 6 million families described as ‘just about managing’. It’s research also shows that in real terms wages are on the decline, and inflation is projected to increase.

But don't get downtrodden, because there's actually loads that you can do to kick out the gloom, and take control of your own finances. Yes, really. Here are some absolutely ace things every family can do to make a genuine dent on how much they can earn tax free. You can thank us later.

Before you read on, a disclosure: these are just suggestions based on average households. Remember that each situation is unique, so before relying on any of these tips, check they apply to you.

1. Get smart with your annual salary

It is all thanks to Marriage Tax Allowance, which could save you £220 if one of you is a non tax-payer (usually because you earn £11,000 or less) and the other is a basic 20% taxpayer, earning less than £43,000.

The earner who has an unused tax allowance (a techy way to say the low earner) can transfer £1,100 to their partner, who can then claim that money as part of their own tax-free allowance. In other words, if you are married or in a civil partnership, and one of you earns £11,000 or less, then transfer £1,100 to the higher earning partner and save £220 a year in tax. Finally, a tax rule we can get on board with!

For Emma Wilson, a 32 year-old part-time receptionist at a beauticians in Brighton who earns just over £10,000 a year, it’s been a no-brainer. “After I had my daughter, I wanted to go back to work in a flexible way so I could spend more time with her, but it means that my earning power isn’t anywhere near what it used to be,” she tells us.

“My husband is an accountant, so I was lucky that he knew this little trick to make a bit of cash. It’s not a huge amount of money, but at the very least it’s a nice meal out for all of us or a weekly shop, if we’re feeling boring.” Not too bad for a few minute’s effort, we say.

Boost your family income

2. Consider taking on some out of office hours work

From April 2017, there will be two new tax-free £1,000 allowances – one for selling goods or providing services, and one income from property you own. Babysitting, gardening, perhaps the catering or bar work at a yearly event. Those who do a little additional work on top of their primary job are allowed up to £1,000 a year tax free. Around 16% of the workforce in the UK now work for themselves full time or part time. For the odd bit of freelance work, sell your skills through sites like Fiverr or Taskrabit (London only at the moment).

Abi Ford, 29, makes most of her money as a press officer working in events but has been doing the odd shift at her friend’s bar since finding out she was allowed up to £1000 a year tax-free. “It’s such an enormous help, especially over Christmas when the extra money is vitally needed,” she tells us.

“Yes it’s sometimes annoying not having a weekend - and I admit I thought my glass collecting days were behind me - but in the cold months I’m not really bothered. Anyway, I saved enough money for a mammoth holiday to Marrakech in the summer, so it’s definitely worth supplementing my wage and getting a tax break.”

Before you book that dream holiday abroad, however, make sure that you do not have a contractual obligation to your employer to seek their permission before taking on additional work.

baby sitting

3. Make that extra junk you've got lying around or your hobby work harder for you

According to eBay, around 200,000 businesses in the UK have set up shop through its platform. Online bargain hunting market places like eBay, Etsy, Amazon, and Not on the High Street are useful ways to make £1,000 tax free cash as of April 2017. You can sell what you make, what you already own but don’t want, or collectibles you might find in junk shops. The catch is that the £1,000pa tax free allowance from these earnings falls under the same category as occasional work, so you need to choose between one or the other.

Sophie Davies, 30, works full time at a restaurant but has been supplementing her wage by selling her illustrations on eBay for three years. “I love selling my work, but if I had to pay tax on anything I sold under £1000 I’m not sure it would be worth my while - it’s a lot of hard work drawing after work and schlepping it to the post office a few times a week,” she tells us. “But with the tax break, it’s definitely worth it.”

Before you start rounding up those items to sell, bear in mind that you must not trade in competition with any employer you may have and you may need permission to trade depending upon the nature of what you're selling. You don't want to face being dismissed or being sued for damages if your employers suffers a loss of trade as a result of your sales.

making money from eBay, Etsy and Amazon

4. Make your savings work for you

As of 2016, savers can collect up to £5,000 in interest from their savings totally tax free if they earn £16,000 or less, dropping to £1,000 for basic rate tax earners, and £500 for those on the higher rate. This is by income not household, so switch your savings to the lower earner. ISAs of up to £15,240 are also tax free.

Helena Hamilton, a 26 year-old journalist from Reading, has been putting her money in ISAs for the last five years. Her top tip? “Transferring the money around using an ISA transfer when the interest changes if you’ve not got a fixed rate - you can stand to make a lot more money. It’s a bit of effort and takes a lot of research and organisation, but you can’t argue with making your money work a bit harder for you.”

making your savings work for you

5. Become a weekend landlord

Earn up to £7,500 tax free (or half that if split between two of you) automatically by renting out furnished accommodation in the home that you live in. Online platform AirBnB has made it easier to rent out rooms on a part time basis. According to Spareroom.com, households letting a room earn on average £8,500pa in London, to around £4,860pa in Leeds.

Peggy Nuttall, an Editorial Creative Director, has been an AirBinB landlord for two and a half years. “We have a spare room in our house which we'd previously rented out to longer term lodgers, but we were lured by the shorter term nature of AirBnB and the knowledge that we could have a break from tenants whenever and as often as we fancied,” she tells us. “We probably have a guest about 70% of the time. In the summer we pretty much always have someone staying with us and what we make month-to-month really varies, but it’s definitely been a great supplement to our income.”

But is it worth the hassle? “Actually, it's really a doddle. We charge a cleaning fee which we use to pay a cleaner to do the room changeover so we generally don't have to worry. Sometimes arranging a time to meet guests is tricky (especially because I'm at work every day), so it's lucky that my partner is freelance and can be more flexible. I can’t imagine not doing it now - we’ve met some amazing people.”

become a weekend landlord

6. Got space somewhere you can park? Use it!

Your home has the potential to earn you an additional £1,000 annually tax free. There is a growing trend for householders to rent out unused space in the loft or spare room as storage, their garden for an allotment or camping, a driveway for parking, and a roof to an energy company for solar panels (although check first as in some cases you earn more by buying the panels yourself). Try companies like theEcoExperts.co.uk, Storemates.co.uk, CampInMyGarden.com.

“Parking space is a premium in Oxford,” says Michael Williams, a 37 year old father of two. “We can easily make £1,000 a year renting out our parking space in the porch of our house, which is just outside of town. Bar picking up the occasional bit of rubbish, it hasn’t effected our family in any way because we also have a garage where we can park the car. It’s a no-brainer.”

Another way you and your family could save money in 2017? By comparing all the deals you can get on your loans and savings accounts, right here.

use your parking space to make you money

7. Make that pension pot work for you…

By getting a stakeholder pension. If you were to invest £100 a month (£1,200 a year) into your personal stakeholder pension, then you would receive £240 totally-tax fee over the course of the year, based on a basic rate tax payer rate of 20%. A higher rate taxpayer can claim an extra 20% tax relief via their self-assessment forms. All rather good news then. 

making your pension work harder

8. Gain a bit by giving back

As if giving to charity didn’t make us all feel amazing enough as it is, thanks to Gift Aid if you’re on a higher or additional rate tax band you’ll actually be able to gain a little by giving back as well. If you make donations made with Gift Aid, you can claim the difference between the basic rate and the rate you pay back on your donation. Only thing to note is that you have to claim the tax back independently from HMRC (rather than HMRC sending it back via a tax return in April). In short, if you’re on a higher rate tax band (40%) and donated £1000, the charity claim £1250 with Gift Aid and would you would claim back 20% (the difference between your higher band and the basic band), which is £250. 

use gift aid to give a little back

Another way you and your family could save money in 2017? By comparing all the deals you can get on your loans and savings accounts, right here

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