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.
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.
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 for retirement: Money and tax
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.
What should I do next?
Use our tax calculator
Check how much tax you should be paying
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