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Income tax

This advice applies to England

Income tax is a tax on income including:

  • earnings from employment, including benefits in kind such as a company car
  • earnings from self-employment
  • most pensions income, including state, occupational and personal pensions
  • some social security benefits
  • interest on most savings
  • income from shares (dividends)
  • rental income
  • income from a trust

Not all types of income are taxable. Read more about taxable and non-taxable income.

You won't usually have to pay tax on all your income, even if it's all taxable, because you'll be entitled to a certain amount of income tax free every tax year. The tax year runs from 6 April one year to 5 April the following year.

There's no minimum age when you have to start paying income tax. What matters is the amount of your taxable income. If this is below a certain level, no tax is payable.

Check how much income tax you'll pay

You can estimate your income tax for the current tax year on GOV.UK. You can’t use the calculator if you’re repaying a student loan or contributing to a pension through your employer. 

There are other online calculators you can use to estimate your income tax if you’re repaying a student loan or contributing to a pension. They include:

You can also work out your income tax by following 4 steps on the Low Incomes Tax Reform Group website.

Income tax calculators can only give you an estimate - if you have questions about your income tax, contact HM Revenue and Customs (HMRC).

HM Revenue and Customs Taxes Helpline
Tel: 0300 200 3300 (Monday to Friday from 8.00am to 8.00pm; Saturday from 8.00am to 4.00pm)
Textphone: 0300 200 3319

Calls usually cost up to 40p a minute from mobiles and up to 10p a minute from landlines. It should be free if you have a contract that includes calls to landlines - check with your supplier if you’re not sure.

Income that's not taxable

Some income is not taxable, which means you don't have to pay tax on it - for example, Housing Benefit, Child Benefit and lottery winnings. The government ignores this income when working out how much tax you have to pay.

Read more about what income is taxable and non-taxable.

Paying tax on foreign income

You might need to pay UK income tax on foreign income, for example:

  • wages if you work abroad
  • foreign investments and savings interest
  • rental income on overseas property
  • income from pensions held overseas

Foreign income is anything from outside England, Scotland, Wales and Northern Ireland. The Channel Islands and the Isle of Man are classed as foreign.

Whether you need to pay depends on if you’re classed as resident in the UK for tax. If you’re not a UK resident, you won’t have to pay UK tax on your foreign income. If you’re a UK resident, you’ll normally pay tax on your foreign income. But you may not have to if your permanent home (domicile) is abroad.

Read more about paying tax on foreign income on GOV.UK.

Tax allowances

The amount of income tax you pay depends on how much of your income is above your 'Personal Allowance'. This is the amount of income you don’t have to pay tax on.

Check how much your Personal Allowance is on GOV.UK.

Your Personal Allowance may be bigger if you’re entitled to Marriage Allowance or Blind Person's Allowance. If you earn more than £100,000 a year, your Personal Allowance is smaller.

Read more about Marriage Allowance and Blind Person's Allowance.

If you're an employee or pensioner who pays tax through the Pay As You Earn (PAYE) scheme, your personal allowance will be spread throughout the year. This means every week or month you’ll have a certain amount of tax-free income and pay tax on the rest.

If you’re self-employed or have other taxable income not taxed through PAYE, your personal allowances will be taken into account when your tax bill is calculated. Your tax bill is calculated after you submit your annual tax return or repayment claim.

Tax reliefs

You don’t have to pay income tax on some work-related expenses - for example, if you need to spend money on uniforms or travel for work. This is called ‘tax relief’. 

Your tax relief is applied in the same way as your personal allowances. If you’re employed, your tax relief is spread throughout the year. If you’re self-employed, or you have other taxable income, your tax relief is taken into account when your tax bill is calculated. Your tax bill is calculated after you submit your annual tax return or repayment claim.

Read more about tax relief and find out how to claim on GOV.UK.

Income tax rates

You’ll be taxed a percentage of your earnings if you earn above your personal allowances and tax relief. The rate of income tax you pay depends on how much money you earn.

Check what the income tax rates are on GOV.UK.

Check if you’ve already paid tax on your income

When you're calculating how much income tax you need to pay, you’ll need to work out if you’ve received any income where the tax has already been paid. Your employer should have already deducted tax from the wages or workplace pension payments you get.

When the government calculates your total taxable income, they deduct your personal allowances and tax relief from your ‘gross income’. This is the amount you received before tax. So when you're working out the total tax you need to pay for the year, make sure you take into account if you've already paid tax on your income. 

You might also pay income tax on the interest you earn on your savings before it’s paid to you. This depends on your personal savings allowance. Check what your personal savings allowance is on GOV.UK. 

National Insurance contributions

As well as checking you’re paying the right amount of income tax, you might want to check you’re paying the correct amount of National Insurance contributions. National Insurance contributions are calculated on gross pay - this is your total pay before tax. If you’re employed, the amount of National Insurance you pay depends on the amount you earn and your pension arrangements.

If you’re self-employed, you pay National Insurance contributions at different rates depending on your profits.

Check what your National Insurance contributions should be on GOV.UK. 

Keeping a record of your income

If you have to do a Self Assessment tax return, you must legally keep a record of your income and any expenses you claim against tax. You’ll need these records if HMRC asks you to complete a tax return. 

Read more about what records to keep and how long you should keep them for on GOV.UK.

How you pay income tax

If you’re employed or you get a pension, your tax is deducted from your earnings before you receive it through the Pay As You Earn (PAYE) scheme. This is called ‘deduction at source’. 

If you’re self-employed, your income tax is not deducted at source and you have to do a Self Assessment.

Read more about how you pay income tax on GOV.UK.

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