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 - you can check if you need to tell HMRC about this income
- some state benefits
- 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 Scheme 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 Scheme 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.
