Income Tax: introduction

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1. 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鈥檙e 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鈥檙e 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:

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.

2. 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鈥檚 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鈥檙e self-employed or have a high income) you may pay Income Tax and National Insurance through Self Assessment. You鈥檒l 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:

  • 拢1,000 from self-employment
  • 拢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 拢1,000 and 拢2,500.

3. 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鈥檚 pension)
  • Carer鈥檚 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鈥檚 Allowance (JSA)
  • pensions paid by the Industrial Death Benefit scheme
  • the State Pension
  • Widowed Parent鈥檚 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鈥檒l have to pay tax)
  • Child Tax Credit
  • Disability Living Allowance (DLA)
  • free TV licence for over-75s
  • Guardian鈥檚 Allowance
  • Housing Benefit
  • Income Support - though you may have to pay tax on Income Support if you鈥檙e 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鈥檚 Pension
  • Winter Fuel Payments and Christmas Bonus
  • Working Tax Credit

4. Work out if you need to pay Income Tax

To work out if you should be paying Income Tax, follow these steps.

  1. Add up all your taxable income, including taxable state benefits.

  2. Work out your tax-free allowances.

  3. Take your tax-free allowances away from your taxable income.

If there鈥檚 anything left, you鈥檙e a taxpayer. Contact the Income Tax helpline if you鈥檙e not already paying tax.

If there鈥檚 nothing left, you should not be paying tax and may be due a refund.

5. Check you're paying the right amount

You can see if you鈥檙e paying the right amount of Income Tax online. For the current tax year (6 April 2024 to 5 April 2025), you can:

You can also:

If you cannot use these services, you can check you鈥檝e paid the right tax by contacting HMRC or by getting help from an accountant.

There鈥檚 a different way to change a Self Assessment tax return.