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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 that can reduce your bill.

Taxable income

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 administered under the War Pensions Scheme and Armed Forces Compensation Scheme)
  • interest from savings accounts
  • dividends from shares
  • income from lettings
  • some benefits, such as ncapacity Benefit and Employment and Support Allowance (they can be taxable or non-taxable)
  • income from a trust.

You do not have to pay tax on:

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

Should I be paying tax?

We all have a personal tax-free allowance (this starts to reduce if your income exceeds £120,000) which represents the amount of income you can receive before paying tax. Some people are entitled to other allowances as well, such as Married Couple’s Allowance and Blind Person’s Allowance.

Our factsheet lists how much the allowances are this year and explain how to work out the amount of tax you should be paying.

Planning your retirement: Money and tax factsheet (PDF 548KB)

It’s important to check you’re paying the right amount of Income Tax. No-one wants to pay more than they need to, and if you’re paying less than you should be, HMRC will catch up with you eventually. Our online tax calculator can help you check if you’re being incorrectly taxed. This includes underpaying as well as overpaying.

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Further information

Downloads

Our Information guides are short and easy to digest, giving a comprehensive overview of the relevant topic. Factsheets are longer with more detail, and are aimed at professionals.

You can download other guides in our series from publications

For more information: Call Age UK Advice: 0800 169 2081

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