6 things you don’t need to pay tax on in the UK

We’re conditioned to believe that we have to pay taxes on everything; at times, it might even seem like even air is taxed. That’s why people are pleasantly surprised once they find out it’s possible to evade paying tax on a number of things – completely legally, at that. We bring to you six things you don’t need to pay taxes on as a UK resident – it’s up to you whether you want to take advantage of them. 

#1. Selling secondhand items

Do you habitually organise garage sales or put your used items up for sale online? Then you have quite an interesting hobby that’s likely to generate some income. Luckily, the money you make from selling secondhand goods will be tax-free, as long as it doesn’t exceed the annual limit of £1,000. You are unlikely to exceed that limit unless you sell rarely used appliances and furniture. 

Keep in mind that the £1,000 tax-free annual trading allowance pertains to people with an income; if you don’t have a regular job, your tax-free allowance goes up to £12,570 per year. 

#2. Winning in a casino

Good news for all those who like to gamble in land-based or established online casinos – you get to keep their winnings all to themselves. As Elias Malo points out, there are many UK Gambling Commission (UKGC) approved online casinos that offer top odds, great promo codes, and plenty of free spins. UK gamblers can take advantage of these features to the max without having to worry about paying taxes on winnings. 

The UK doesn’t have any taxation rules pertaining to casino winnings in place, so UK residents don’t have to declare any casino wins in a self-assessment tax return. The UK did impose a gambling tax many years ago, however, to compete with the wave of offshore competitors, they decided to remove it. 

#3. Letting out a room

Do you have a spare room in your home or own a guest house that’s always empty? Have you thought about turning it into a source of income for your family? Not only can you make money from letting out an unused room, but you can avoid paying taxes on it. However, this is where the price of the room plays a crucial role, as UK citizens are free of paying taxes from letting out a room in case their income from the ordeal doesn’t exceed £7,500 per year. 

If your free room generates more profit than that, you will have to complete a tax return. You get to choose how to calculate and pay your taxes to avoid a fine. You’ll also avoid tax penalties for late filing, which start at £100 for being three months late, and go up from there.

#4. Donating to charity

If you frequently give to those in need, you probably already know that donations are tax-free. But if you intend to donate something to an organization for the first time—be it a property, shares, or money—and aren’t familiar with the rules and regulations that come with it, you can proceed ahead without worrying about taxes. Charity donations come with tax relief and, as of 2023, there are 1,180 tax reliefs currently in force. 

Many special tax benefits come with donating to charity; for example, the UK’s charities are exempt from Inheritance tax, so leaving your estate to a charity will reduce its taxable value. 

#5. Winning a lottery

Should you be lucky enough to win the lottery, rest assured you’ll be able to keep all of your money. Whether you win thousands or millions doesn’t matter – lottery winnings aren’t considered an income. They count as a form of gambling, which isn’t taxed in the United Kingdom. 

However, you won’t be able to get off completely tax-free. Once you put the money in your bank account, you will have to pay Income tax on the interest you gain. The same goes for money generated from those winnings – making any investments or buying properties will entail different types of taxes. 

#6. Renting out your driveway

Not many people will come to the idea of renting out their driveway, but this can be a very lucrative option for those who live in densely populated areas with little parking space. If you have some extra capacity on your driveway, you can rent it out as a parking space and avoid paying taxes on it. Again, you’ll only be exempt from taxes for the first £1000 you make. If you make more than that in a single tax year, you will have to fill out a self-assessment tax return and include this income on the sheet.