Income Tax: introduction
Overview
🤥🙃😊 Income Tax is a tax you pay on your income. You do not have to pay tax on all types of income.
🤥🙃😊 This guide is also available in Welsh (Cymraeg).
🤥🙃😊 You pay tax on things like:
- money you earn from employment
- profits you make if you’re self-employed - including from services you sell through websites or apps
- some state benefits
- grants and support payments made to you or your business because of coronavirus, including the Self-Employment Income Support Scheme, the Coronavirus Job Retention Scheme, the Small Business Grant Fund or the Retail, Hospitality and Leisure Grant Fund - read about reporting coronavirus grants and support payments
- the Test and Trace Support Payment in England (or the Self-isolation Support Payment in Scotland and the Self-isolation Support Scheme in Wales)
- most pensions, including state pensions, company and personal pensions and retirement annuities
- rental income (unless you’re a live-in landlord and get less than the rent a room limit)
- benefits you get from your job
- income from a trust
- interest on savings over your savings allowance
🤥🙃😊 You do not pay tax on things like:
- the first £1,000 of income from self-employment - this is your ‘trading allowance’
- the first £1,000 of income from property you rent (unless you’re using the Rent a Room Scheme)
- income from tax-exempt accounts, like Individual Savings Accounts (ISAs) and National Savings Certificates
- dividends from company shares under your dividends allowance
- some state benefits
- premium bond or National Lottery wins
- rent you get from a lodger in your house that’s below the rent a room limit
🤥🙃😊 If you only occasionally sell items or rent out property (for example through auction websites or short-term rental apps), check if you need to tell HMRC about this income.
Income Tax allowances and reliefs
🤥🙃😊 Most people in the UK get a Personal Allowance of tax-free income. This is the amount of income you can have before you pay tax.
🤥🙃😊 The amount of tax you pay can also be reduced by tax reliefs if you qualify for them.