Tax Allowance

A tax allowance is the amount of money that you are allowed to earn on a particular stream of income before you must pay tax on that income. For example, many people would have a personal tax allowance, which would be the amount that they could earn before they would start paying income tax. They may, at some point, also make a profit on a house, which they would be liable to pay capital gains tax on. There is also a capital gains tax allowance, which again, is the amount that they are permitted to make before paying any capital gains tax. These allowances are stand alone, and your wage income will not affect your capital gains tax allowance, and vice versa.

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