What is Income Tax?

Tax Code
Income tax is tax paid on an individual’s income. The tax is payable on any income you receive in a tax year over and above your Personal Allowance.

Income tax is a tax paid to HMRC on income from a number of sources including self-employment, wages from salaried employment, interest earned on bank accounts, share dividends and income from renting property.

Your tax code does not contain details of your income, it just tells your income provider how much tax to withhold. HMRC works out your tax code depending on how much you can earn tax-free, and your personal situation.

Everyone is entitled to an amount of tax-free income every year. This is called your Personal Allowance. You pay Income Tax on anything you earn during the course of a tax year over and above your Personal Allowance

If you are an employee, you will have a tax code. This tells your employer how much income tax you need to pay in the tax year. Your income tax is then deducted from your salary, and paid directly to HMRC by your employer.

If you are self-employed you pay income tax through the Self-Assessment Tax Return which you file every year with HMRC. If you are using Numberworx, we will complete and file your tax return on your behalf.

Can we help?

If you have a question regarding income tax or your Self Assessment Tax Return don’t hesitate to ask. We are always pleased to help