Who is exempt from paying income tax in the UK? Full list

For example, you pay income tax on money you earn from employment, some state benefits and interest on savings over your savings allowance.

You also pay income tax on profits you make if you’re self-employed, including from services you sell through websites or apps (check with HMRC if you need to tell them about this type of income).

Other things you must pay income tax on according to GOV.UK, are:

  • 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
  • the Test and Trace Support Payment in England (or the Self-isolation Support Payment in Scotland and the Self-isolation Support Scheme in Wales)
  • 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 Scheme limit)
  • benefits you get from your job
  • income from a trust

Who doesn’t pay income tax in the UK?

However, there are some things you don’t need to pay income tax on in the UK, as reported by GOV.UK.

They are as follows:

  • 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 Savings Accounts (ISAs) and National Savings Certificates
  • dividends from company shares under your dividends 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 Scheme limit

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Most people also get a standard tax-free Personal AAllowance of £12,570.

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“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,” explains GOV.UK.

Some people may also be eligible for tax relief on maintenance payments.

You can check all income tax rates and bands on the GOV.UK website as well as how to claim a refund if you think you have paid too much.

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