Playing now

Playing now

What is income tax?

Glossary definition

What is income tax?

Income tax is the tax an individual pays on their income – regardless of whether they earned the income or not. This includes your salary, profits if you’re self-employed, income on your savings, and tax on most pensions.

Most people get a personal allowance, which gives them a certain level of income that is exempt from tax. You’ll pay tax on any income above this level.