Income Tax is a tax you pay on your income. You don’t have to pay tax on all types of income.
You pay tax on things like:
- money you earn from employment;
- most pensions;
- interest on savings;
- rental income;
- benefits you get from your job;
- income from a trust.
You don’t pay tax on things like:
- income from tax-exempt accounts, like Individual Savings Accounts (ISAs);
- Working Tax Credit;
- premium bond wins.
Income Tax allowances and reliefs
Most people in the UK get a ‘Personal Allowance’ of tax-free income. This is an amount of income you can have before you pay tax. If born before 6 April 1948, you may get a higher tax-free allowance.
The amount of tax you pay can also be reduced by tax reliefs if you qualify for them.