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T26: UK Taxes Overview

1 Tax on Income – include and exclude and Tax Codes

You pay tax on things like:

  • money you earn from employment
  • profits you make if you’re self-employed
  • some state benefits
  • some grants and support payments made to you or your business
  • most pensions, including state pensions and retirement annuities
  • rental income
  • 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 -‘trading allowance’
  • the first £1,000 of income from property you rent 
  • income from tax-exempt accounts, like ISA and National Savings Certificates
  • dividends from company shares under your 
  • some state benefits
  • premium bond or National Lottery wins 

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.

Your tax code is used by your employer or pension provider to work out how much Income Tax to take from your pay or pension. HM Revenue and Customs (HMRC) will tell them which code to use.

For more information refer UK gov Iax website

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