Answers · UK 2025/26
What counts as taxable income in the UK?
UK taxable income includes employment salary, self-employment profits, pension income, taxable benefits, rental income, savings interest above PSA, dividends above £500 allowance, and most capital gains. ISA income, Premium Bond winnings and certain gifts are NOT taxable.
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UK taxable income overview 2025/26. Earned income: salary from employment (PAYE), self-employment profit, partnership share of profits, director's salary, pension income (State, workplace, personal). Investment income: savings interest above £1,000/£500/£0 PSA, dividends above £500 dividend allowance, rental profit (less Section 24 mortgage interest credit), royalties. Property: rental profit (UK and worldwide if resident), Furnished Holiday Lettings (regime ends April 2025), capital gains on sale (separate CGT regime). Trust income: usually taxed first in trust hands. Foreign income: if UK resident, worldwide income (subject to FIG regime for new arrivals from April 2025). Capital gains: separate annual exempt amount £3,000, separate rates. Taxable but not "income": state benefits (some taxable: Jobseeker's, Carer's Allowance, State Pension; some not: PIP, Universal Credit element, Child Benefit), redundancy pay above £30k, ex-gratia termination payments above £30k. NOT taxable: ISA income/gains (Cash, S&S, LISA, IFISA, JISA); Premium Bond winnings (NS&I, tax-free); winnings from gambling, lotteries; gifts from individuals (subject to IHT, not Income Tax); insurance payouts (mostly); compensation for personal injury; first £30k of redundancy. Order of taxation: non-savings income first, then savings, then dividends — each used in turn against bands/allowances.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.