Taxable income

Taxable income - overview

It is not always easy to know if a certain type of income is taxable or not. We list the most common types of taxable income to help you. As the tax rules are complex, it has not been possible to include all types of income on this page, but there are links to more information.

The lists below include income that is normally taxable.

Sometimes you receive taxable income after tax has been deducted at source (that is, you receive it net).

Sometimes you receive taxable income without tax having been deducted at source (that is, you receive it gross).

If income is taxable, it does not matter whether you receive it net or gross, you have to include the gross amount (the figure before any tax was taken off) in your calculation of your taxable income. Just because you receive some income without tax having been taken off, it does not mean that the income is exempt or tax free. You need to check.

Taxable earned income

• Wages and salaries, including holiday pay, bonuses and tips
• Profits from self-employment (though if your total self-employment income (before expenses) is no more than £1,000, you may not have to pay any tax, because of the trading allowance)
• Pensions from occupational pensions, private pensions, personal pension plans or retirement annuity policies (though part might be paid as a tax-free lump sum – usually up to 25% of the value of the policy)
• Benefits-in-kind, which might also be called ‘perks’ of your job. Examples include private medical insurance or a company car.
• Reimbursed expenses which are not wholly, exclusively and necessarily incurred to do, or when doing, your job but are paid for by your employer
• Redundancy/termination payments over £30,000

There is a more detailed list of taxable earned income on our page Taxable employment income.

Taxable state benefits

The UK government supports people in certain times of need, by way of the state benefits system. Some benefits are taxable, but others are not. Importantly, tax credits are not taxable income and neither is universal credit.

We provide a separate list of state benefits in which we give the tax treatment of each. Please refer to our page State benefits to see whether any benefits you may claim are taxable or not.

Taxable savings and other investment income

• Bank or building society interest: the interest is usually taxable, but tax is not normally deducted at source
• Dividends from shares or from collective investments such as investment trusts
• National Savings and Investments (NS&I) products can cause confusion because some are taxable and some are tax free. Common taxable NS&I products are: Income Bonds, the Investment Account, Guaranteed Income Bonds and Guaranteed Growth Bonds (including the 65+ Guaranteed Growth Bond) – the interest is taxable, but tax may not be deducted at source
• Interest from savings deposits with credit unions
• Property letting: most income from renting out a property, including from second properties, (though if your total property income (before expenses) is no more than £1,000, you may not have to pay any tax on this income, because of the property allowance). You can claim certain expenses against the income. If you rent out a room in your home, you should read our separate page on the rent a room scheme
• Purchased annuities: the income element
• Taxable gains on life assurance policies or investment bonds
• UK companies: interest paid
• UK government stocks, gilts or interest, for example, Treasury Stock and War Loan Stock
• UK unit trusts or Open-Ended Investment Companies, both interest and dividends.

Taxable other income

• Trust or settlement income
• Income from the estate of a deceased person
• Jurors' financial loss allowance (payments for loss of profits when on jury service), when the juror is self-employed
• Payments to volunteers that do more than reimburse out-of-pocket expenses, for example if you are a volunteer driver and are paid more than HMRC's approved mileage rates
• Pre-owned assets: a tax charge which can arise on something you have given away but still retain some interest in, or benefit from.

Taxable miscellaneous income

Miscellaneous income is subject to income tax broadly if it is either:

• payment for a service if it was agreed there would be a reward for providing the service,
• income received under an agreement that is not taxable under any other tax rules, or
• payment for the use of money that is not interest.

The most common type of taxable miscellaneous income that you are likely to come across is hobby income. This is generally income from activity that is not a trade or profession – so they are not self-employed. However, payment has been or is agreed for the service or item. Typical examples of hobby income may include:

• someone may receive payments for writing an article from time to time or selling a photograph occasionally
• someone may buy and sell items (not of a capital nature), but as a hobby, not with a view to making a profit. This might be the case where they collect items, and occasionally sell items from their collection, or where they buy an item, carry out some work on it, and then sell on.

Where someone makes small amounts of income from occasional jobs or a hobby activity, the trading allowance may be available. This may mean that they do not end up having to pay any tax on the income.