Income tax
Income tax is a tax on income (wages/earnings/profits). Not all income is taxable and you will only be taxed on income above a certain amount.
You’ll pay income tax on:
wages from full or part-time work;
income if you’re self employed;
pensions;
some benefits like Jobseeker’s allowance;
income you get from savings and investments including bank/building society interest, rent from any properties you own.
There are some allowances for example; all UK residents have a personal allowance which is the amount of income you are allowed to earn each year without having to pay tax on it.
This tax year (2007/08), the personal allowance is £5,225. So, for example, if you were to work part time and you didn’t earn over £5,225 in the whole year you wouldn’t have to pay income tax on these wages. This is because income tax is only due on income above your tax-free allowance.
There are extra allowances like the Additional Personal Allowance which is for single parents and also Blind Person’s Allowance.
Find out how much tax you have to pay.