Pensioners can raise tax-free income to over £21,000 using two government schemes
State pensioners may increase their Personal Allowance to more than £21,000 by combining the rent-a-room relief with Marriage Allowance.
Pensioners in the UK have the opportunity to boost their tax-free earnings beyond the basic Personal Allowance of £12,570. By opting into the rent-a-room scheme, they can receive up to £7,500 a year from letting a furnished room without paying tax, and the scheme is open to any resident landlord regardless of property ownership. The second option, Marriage Allowance, permits the lower-earning partner to shift £1,260 of their allowance to the higher-earning spouse, lowering the latter’s taxable income and saving up to £252 in tax.
To qualify, the transferring partner must have income below the standard allowance, while the receiving partner must be a basic-rate taxpayer. Together, these measures can raise a pensioner’s tax-free income to more than £21,000.
