Income Tax is a tax on income. Not all income is taxable and only 'taxable income' above a certain level is taxed. There are also other reliefs and allowances that can reduce the Income Tax - and in some cases no tax is payable.
Taxable Income
Taxable income includes:
Earnings from employment
Includes income from full, part-time and temporary employment.
If you get perks or benefits from your employer these may also be taxable.
Earnings from self-employment
Profits you make from working for yourself as a sole trader or partner.
Most pensions incomes (State, company and personal pensions)
State Pension.
Personal or company pensions.
Retirement annuity.
Interest on most savings
Bank and building society interest - not including Individual Savings Accounts (ISAs) and Personal Equity Plans (PEPs).
National Savings and Investments accounts and bonds.
Income from shares (dividends)
Dividends on company shares - not including dividend income from ISAs and PEPs.
State benefits
Carer's Allowance.
Jobseeker’s Allowance.
Employment and Support Allowance - ‘contribution’ based (if you have paid enough National Insurance contributions).
Incapacity Benefit - from week 29.
Weekly Bereavement Allowance.
Rental income
From a lodger in your only or family home if more than £4,250 a year (£2,215 if split jointly).
From a second property.
Income paid to you from a trust
Pensioner bonds.
Non-taxable Incomes
State benefits The most common non-taxable state benefits are:
Disability Living Allowance.
Attendance Allowance.
Lump sum Bereavement Payments.
Pension Credit.
Free TV licence for over 75s.
Winter Fuel Payments and Christmas Bonus.
Housing Benefit.
Employment and Support Allowance - income based (if you haven’t paid enough National Insurance contributions).
First 28 weeks of Incapacity Benefit.
Income Support - certain payments.
Child Benefit.
Guardian's Allowance.
Maternity Allowance.
Industrial Injuries Benefit.
Severe Disablement Allowance.
War Widow's Pension.
Young Person's Bridging Allowance.
Interest on savings
All ISAs and PEPs.
Savings Certificates.
Rents
First £4,250 a year from a lodger in your only or family home - £2,125 if split jointly.
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