Should you be paying Income Tax?

Not all income is taxable - and you're only taxed on income above a certain level. If your taxable income is more than your tax-free allowances you must contact HM Revenue & Customs (HMRC) if you're not already paying tax. If it's less than or equal to your allowances, you shouldn't be paying tax and may be due a refund.

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Working out whether you're a taxpayer

To work out if you're a taxpayer follow these three steps:

  • add up all your taxable income
  • work out your tax-free allowances
  • take your tax-free allowances away from your taxable income

Step one - add up your taxable income

Some income is taxable and some is never taxed. To see if you're a taxpayer, you first add up your taxable income in a tax year (6 April to 5 April) - you can ignore your non-taxable income. To view or print off a list of taxable and non-taxable income, follow the link below.

Taxable and non-taxable income

Step two - add up your tax-free allowances

Tax-free allowances are amounts of income you can get without paying tax. They include the Personal Allowance and the Blind Person's Allowance.

Personal Allowance

Almost everybody gets the basic Personal Allowance, but if you're born before 6 April 1948 and your income is below a certain limit the amount is higher.

Levels of Personal Allowance

Personal Allowance rates

2014 to 15

Income limit

Born after 5 April 1948

£10,000

£100,000

Born between 6 April 1938 and 5 April 1948

£10,500

£27,000

Born for people before 6 April 1938

£10,660

£27,000

Check Income Tax allowances and income limits for earlier tax years

Personal Allowance - if you were born before 6 April 1948 and your income is between £27,000 and £100,000.

If your income is over £27,000 (the income limit for the higher Personal Allowances for 2014 to 15) but not more than £100,000, your higher Personal Allowance is reduced by half of the amount - £1 for every £2 - you have over the £27,000 limit, until the basic rate allowance is reached. So if, for example, you're born after 5 April 1938 but before 6 April 1948 and have income of £27,500 - £500 over the limit - your higher Personal Allowance is reduced by £250 to £10,250.

Personal Allowance - if your income is above £100,000

If your income is over £100,000, your Personal Allowance is reduced by half of the amount - £1 for every £2 - you have over that limit. If your income is large enough, your Personal Allowance will be reduced to nil. This £100,000 limit applies irrespective of your date of birth.

Personal Allowance – find out more

Blind Person's Allowance

If you're certified blind and are on a local authority register of blind persons, or if you live in Scotland or Northern Ireland and you are unable to perform any work for which eyesight is essential, you can claim Blind Person's Allowance. If you're married or in a civil partnership and can't use all your allowance, you can give the unused part to your spouse or civil partner. Even if you have no taxable income, it might be still worth claiming Blind Person's Allowance as your spouse or civil partner could benefit from your allowance.

The Blind Person's Allowance for the tax year 2014 to 15 is £2,230.

Blind Person's Allowance - learn more

Step three - work out if you're a taxpayer

Take your tax-free allowances away from your taxable income. If there's anything left, you count as a taxpayer and must contact HMRC if you're not already paying tax. If there's nothing left you shouldn't be paying any tax and may be due a refund. Follow the links below to contact HMRC or to find out how to claim a refund.

Contact HMRC

Tax refunds and reclaiming overpaid tax

Taxpayer: worked example for 2014 to 15 tax year

You were born before 6 April 1938 and registered blind. You've added up your taxable income and it comes to £19,000.

  • Your taxable income is £19,000 (your income is below the £27,000 limit so you’ll get the full amount of higher Personal Allowance).
  • Your tax-free allowances add up to £12,890 (higher Personal Allowance of £10,660 plus Blind Person's Allowance of £2,230).
  • You subtract your tax-free allowances (£12,890) from your taxable income (£19,000) - this leaves you with taxable income of £6,110.

Non-taxpayer: worked example for 2014 to 15 tax year

You were born after 5 April 1948 and have a part-time job. Your taxable income is £4,500.

  • Your taxable income is £4,500.
  • Your tax-free allowance is £10,000 – the Personal Allowance for people born after 5 April 1948.
  • You subtract your Personal Allowance (£10,000) from your taxable income (£4,500) and find that you don't need to pay tax on your income.
  • If you have been paying tax, you may be due a refund.

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Allowances that can reduce your tax

Bear in mind that even if you count as a taxpayer, you may qualify for certain 'tax deductible' allowances that can reduce your tax bill, or in some cases mean you have nothing to pay. Read the guide below to find out more.

Introduction to tax allowances and reliefs

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More useful links

Do you need to fill in a tax return?

Check Income Tax rates and allowances

Tax on pensions and benefits

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