Income Tax

Topic Selected: Money and Finance

General Article icon Type: General Article

Overview

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 (PA

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