In this section:
- Income Tax - the basics
- Taxable and non-taxable income at a glance
- Should you be paying Income Tax?
- Ways you pay Income Tax
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 us 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.
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
Everybody gets the basic Personal Allowance, but if you're 65 or over and your income is below certain levels the rate increases.
| Personal Allowance rates | 2008-09 | Income limit (see note) |
|---|---|---|
| Basic rate | £6,035 | none |
| Age 65 to 74 | £9,030 | £21,800 |
| Age 75 or over | £9,180 | £21,800 |
Note: If your income is over the income limit, we reduce the age related allowance by half of the amount - £1 for every £2 - you have over that limit, until the basic rate allowance is reached. You'll always get the basic allowance, whatever the level of your income.
So if, for example, you're 66 and have an income of £22,400 (£600 over the limit) we would reduce your age related allowance of £9,030 by £300 to £8,730.
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 2008-09 is £1,800.
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 us 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 us or to find out how to claim a refund.
Tax refunds and reclaiming overpaid tax
Taxpayer: worked example
You are 76, registered blind. You've added up your taxable income and it comes to £19,000.
- Your taxable income is £19,000.
- Your tax-free allowances add up to £10,980 (Age Related Personal Allowance of £9,180 plus Blind Person's Allowance of £1,800).
- You subtract your tax-free allowances (£10,980) from your taxable income (£19,000) - this leaves you with taxable income of £8,020.
Non-taxpayer: worked example
You are 46 and have a part-time job. Your taxable income is £4,500.
- Your taxable income is £4,500.
- Your tax-free allowance is £6,035 - the basic rate Personal Allowance.
- You subtract your Personal Allowance (£6,035) 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.
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
More useful links
Do you need to fill in a tax return?
