Income tax

If your income is over a certain amount, you will have to pay Income Tax on it. Not all income is taxable, and there are allowances and reliefs you may be able to claim.

What do I have to pay income tax on?

Not all income counts towards Income Tax. You may have to pay tax on:

• earnings from employment or self-employment
• pensions, including State Pension, and annuities (except pensions under the War Pensions Scheme and Armed Forces Compensation Scheme)
• interest from savings accounts
• dividends from shares
• income from lettings
• some benefits, such as Carer’s Allowance and Statutory Sick Pay
• income from a trust.

Do I have to pay tax on all my income?

You do not have to pay tax on:

• Pension Credit
• Universal Credit
• Attendance Allowance
• Disability Living Allowance
• Personal Independence Payment
• Winter Fuel Payment
• pensions administered under the War Pensions Scheme and Armed Forces Compensation Scheme
• lottery or Premium Bond wins
• industrial injuries benefits
• Individual Savings Accounts (ISAs)
• some National Savings and Investments products.

Contact Tax Help for Older People or HM Revenue and Customs (HMRC) for further information about which types of income are taxable and non-taxable.

How much income tax should I be paying?

We all have a personal tax-free allowance representing the amount of income you can receive before paying tax. This tax-free amount starts to reduce if your income exceeds £100,000. Some people are entitled to other tax-free allowances as well, such as Married Couple’s Allowance and Blind Person’s Allowance.

What should I do next?