Income tax
As its name suggests, income tax is simply an amount of tax we pay on the money we earn (our income) - however, you don't have to pay tax on all types of income.
Click on the buttons below to see examples of income you do and don't pay tax on.
Taxed
Examples of income you pay tax on include:
- Money you earn when you are employed by someone
- Profits made by your business if you are self employed
- Money you make from renting property, in excess of £5,965
- Interest earned on savings you have in the bank.
Untaxed
Examples of income you don't pay tax on include:
- Winnings from Premium Bonds
- Winnings from the National Lottery
- Interest earned on savings accounts that are classed as 'tax-exempt' - such as Individual Savings Accounts (ISAs)
- The first £5,965 you make from renting property.
The amount of income tax someone pays depends on:
- How much money they earn in a particular tax year (each tax year runs from 6th April to 5th April the following year)
- How much of this income is above their personal allowance.
Click to see facts and figures relating to personal allowances.
Personal allowances
Your personal allowance is the amount of income you are able to earn before you need to start paying income tax. This table shows the personal allowance amounts allowed over the last few tax years - you can see how it has gradually increased over the years.
| 2015 to 2016 | 2014 to 2015 | 2013 to 2016 | 2012 to 2013 | |
|---|---|---|---|---|
| Personal Allowance (for people born after 5 April 1948) |
£10,600 | £10,000 | £9,440 | £8,105 |
It is anticipated that the personal allowance amount will continue to increase - up to £10,800 in the 2016-17 tax year and £11,000 in 2017-18.