Tax and NI

11. Non-taxable Income

Below are the main types of allowances and non-taxable income.

11.1 Individuals receive a basic personal allowance of £7,475 (ie the first £7,475 of your income is not taxable) for 2011/12.

• If your husband, wife or civil partner has no other income, it makes sense from a tax point of view to employ her or him with a salary of at least £7,475. The employment must be a genuine job and the salary must be physically paid over to the employee.
• If you are in paid work (including the self-employed) you may qualify for Working Tax Credit.
• The basic personal allowance is only available to those earning less than £100,000.Where income is more than £100,000, the amount of the allowance is reduced by £1 for every £2 earned above the limit.

11.2 The married couples' allowance has been abolished for most taxpayers.

• It is still available for older couples on below average income.
• There is a Child Tax Credit available if you are supporting a child below the age of 16. This replaces the Children's Tax Credit. It is paid at a higher rate for a child under the age of one, or a disabled child.

11.3 Redundancy payments below £30,000 may be tax free. Check your situation in advance.

11.4 Certain social security benefits may be tax free, depending on circumstances.

• These include maternity and child benefits, family credit and the mobility component of disability living allowance.

11.5 Directors and partners (but not sole traders) can claim interest relief on money which they borrow personally and then lend to the business.