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.

How you pay Income Tax

Pay As You Earn ( PAYE ) Most people pay Income Tax through PAYE . This is the system your employer or pension provider uses to take Income Tax and National Insurance contributions before they pay your wages or pension. Your tax code tells your employer how much to deduct. Tax on state benefits Your tax code can take account of taxable state benefits , so if you owe tax on them (for example for the State Pension) it’s usually taken automatically from your other income. If the State Pension is your only income, HM Revenue and Customs ( HMRC ) will write to you if you owe Income Tax. You may need to fill in a Self Assessment tax return. Self Assessment tax returns If your financial affairs are more complex (for example you’re self-employed or have a high income) you may pay Income Tax and National Insurance through Self Assessment . You’ll need to fill in a tax return every year. You must also fill in a Self Assessment tax return if you earned more than either: £1,000 from self-employment £2,500 from other untaxed income, for example from tips or renting out a property Contact the Income Tax helpline if your income from renting out a property was between £1,000 and £2,500.

Tax-free and taxable state benefits

State benefits that are taxable The most common benefits that you pay Income Tax on are: Bereavement Allowance (previously Widow’s pension) Carer’s Allowance or (in Scotland only) Carer Support Payment contribution-based Employment and Support Allowance (ESA) Incapacity Benefit (from the 29th week you get it) Jobseeker’s Allowance (JSA) pensions paid by the Industrial Death Benefit scheme the State Pension Widowed Parent’s Allowance Tax-free state benefits The most common state benefits you do not have to pay Income Tax on are: Attendance Allowance Bereavement support payment Child Benefit (income-based - use the Child Benefit tax calculator to see if you’ll have to pay tax) Child Tax Credit Disability Living Allowance (DLA) free TV licence for over-75s Guardian’s Allowance Housing Benefit Income Support - though you may have to pay tax on Income Support if you’re involved in a strike income-related Employment and Support Allowance (ESA) Industrial Injuries Benefit lump-sum bereavement payments Maternity Allowance Pension Credit Personal Independence Payment (PIP) Severe Disablement Allowance Universal Credit War Widow’s Pension Winter Fuel Payments and Christmas Bonus Working Tax Credit

Work out if you need to pay Income Tax

To work out if you should be paying Income Tax, follow these steps. Add up all your taxable income , including taxable state benefits . Work out your tax-free allowances . Take your tax-free allowances away from your taxable income. If there’s anything left, you’re a taxpayer. Contact the Income Tax helpline if you’re not already paying tax. If there’s nothing left, you should not be paying tax and may be due a refund .

Check you're paying the right amount

You can see if you’re paying the right amount of Income Tax online. For the current tax year (6 April 2024 to 5 April 2025), you can: check your Income Tax payments work out how much Income Tax you should be paying You can also: check how much Income Tax you paid last year (6 April 2023 to 5 April 2024) estimate how much Income Tax you should have paid in a previous year If you cannot use these services, you can check you’ve paid the right tax by contacting HMRC or by getting help from an accountant . There’s a different way to change a Self Assessment tax return .

Income Tax: introduction

Overview

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.

View a printable version of the whole guide

Income Tax: introduction

Overview

Income Tax allowances and reliefs

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Income Tax: introduction

Overview

Income Tax allowances and reliefs

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