General Article Income Tax

Topic Selected: Money and Finance
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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.

How you pay Income Tax

Pay As You Earn (PAYE)

Most people pay Income Tax through PAYE. This is the system your employer or pension provider uses to take Income Tax and National Insurance contributions before they pay your wages or pension...

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