Income Tax is a tax you pay on your income. You do not have to pay tax on all types of income.
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 wbsites or apps
· some state benefits
· grants and support payments made to you or your business because of coronavirus, including the Self-Employment Income Support Scheme, the Coronavirus Job Retention Scheme, the Small Business Grant Fund or the Retail, Hospitality and Leisure Grant Fund
· 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 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 Saving Account(ISA) Savings Certificates
· dividends from company shares under your dividend 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 limit
Current rates and allowances
How much Income Tax you pay in each tax year depends on:
· how much of your income is above your Personal Allowance
· how much of your income falls within each tax band
Some income is tax free
The current tax year is from 6 April 2022 to 5 April 2023.
The standard Personal Allowance is £12,570, which is the amount of income you do not have to pay tax on.
Your Personal Allowance may be bigger if you claim Marriage Allowance or Blind Person’s Allowance. It’s smaller if your income is over £100,000.
Income Tax rates and bands
| The table shows the tax rates you pay in each band if you have a standard Personal Allowance of £12,570. Band | Taxable income | Tax rate |
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £150,000 | 40% |
| Additional rate | over £150,000 | 45% |
You can also see the rates and bands without the Personal Allowance. You do not get a Personal Allowance on taxable income over £125,140.
There are more allowance which might be right to consider as and when situations arise.
Please let us know if you have any more queries at accountants@tribocon.com