Not all income is taxable. You can also receive some normally ‘taxable’ income ‘tax-free’. The lists below will help you to work out what income counts as ‘taxable’ and ‘non-taxable’ – and what taxable income you can receive tax-free.
What counts as taxable income?
- includes income from full, part-time and temporary employment
- if you get perks or benefits from your employer these may also be taxable
- More information on taxable company benefits
Profits you make from working for yourself as a sole trader or partner.
- State Pension
- personal or company pensions
- retirement annuity
- bank and building society interest – not including Individual Savings Accounts (ISAs) and Personal Equity Plans (PEPs)
- National Savings and Investments accounts and bonds
Dividends on company shares- not including dividend income from ISAs and PEPs.
The most common taxable state benefits are:
- Carer’s Allowance
- Jobseeker’s Allowance
- Employment and Support Allowance – ‘contribution’ based (if you have paid enough National Insurance contributions)
- Incapacity Benefit -from week 29
- Weekly Bereavement Allowance
- from a lodger in your only or family home if more than 4,250 a year (2,215 if split jointly)
- from a second property
- pensioner bonds
- trust income
What counts as non-taxable income?
The most common non-taxable state benefits are:
- Disability Living Allowance
- Attendance Allowance
- lump sum Bereavement Payments
- Pension Credit
- free TV licence for over 75s
- Winter Fuel Payments and Christmas Bonus
- Housing Benefit
- Employment and Support Allowance – income based (if you haven’t paid enough National Insurance contributions)
- first 28 weeks of Incapacity Benefit
- Income Support – certain payments
- Child Benefit
- Guardian’s Allowance
- Maternity Allowance
- Industrial Injuries Benefit
- Severe Disablement Allowance
- War Widow’s Pension
- Young Person’s Bridging Allowance
- all ISAs and PEPs
- Savings Certificates
- first 4,250 a year from a lodger in your only or family home – 2,125 if split jointly
- Working Tax Credit
- Child Tax Credit
Wins from Premium Bonds are free from UK Income Tax and Capital Gains Tax.
If you have income that is not shown above
If you have income that is not shown above, please contact your Tax Office by following the link below.
Taxable income that you can receive tax-free
Everyone is entitled to receive a certain amount of taxable income tax-free during the tax year. This is called the Personal Allowance and it increases from age 65.
If you’re certified blind and 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. As with the Personal Allowance, this is an amount of taxable income you can receive during the tax year without paying tax.
- Personal Allowance
- Blind Person’s Allowance
More useful links
- Income Tax allowances and reliefs