{"id":7951,"date":"2020-10-21T15:11:19","date_gmt":"2020-10-21T14:11:19","guid":{"rendered":"https:\/\/taxfix.com\/en-uk\/?p=7951"},"modified":"2025-10-28T11:10:15","modified_gmt":"2025-10-28T11:10:15","slug":"how-much-is-tax-on-investment-income","status":"publish","type":"post","link":"https:\/\/taxfix.com\/en-uk\/investor-capital-gains-tax-returns\/trading\/how-much-is-tax-on-investment-income\/","title":{"rendered":"How much is tax on investment income?"},"content":{"rendered":"\n<p>Tax on investment income varies in the UK. What you pay depends on the type of investment you make money from. Here is a list of taxable investments:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Interest from savings<\/li>\n\n\n\n<li>Income from a pension<\/li>\n\n\n\n<li>Rental income&nbsp;<\/li>\n\n\n\n<li>Dividends from shares<\/li>\n\n\n\n<li>Capital gains from shares or property<\/li>\n<\/ul>\n\n\n\n<p>But there are also tax-free allowances that affect how much you have to pay.&nbsp;<\/p>\n\n\n<\/div> <!-- .c-body -->\n\n<div class=\"b-highlight-mini m-yellow m-align-left\">\n    <div class=\"b-block-body\">\n        <h2>What are tax-free allowances on investment income?<\/h2>\n<ul>\n<li><strong>Rental Income<\/strong>\n<ul>\n<li>Rent-a-Room scheme &#8211; get your first \u00a37,500 tax-free if you live in the property you\u2019re renting a room out from<\/li>\n<li>Property Income Allowance &#8211; get your first \u00a31,000 tax-free if you rent out a buy-to-let property or second home<\/li>\n<\/ul>\n<\/li>\n<li><strong>Dividends from shares<\/strong>\n<ul>\n<li>Dividends Allowance &#8211; only pay tax on profits over \u00a3500<\/li>\n<\/ul>\n<\/li>\n<li><strong>Capital gains<\/strong>\n<ul>\n<li>Capital Gains Tax Allowance &#8211; get your first \u00a33,000 of profit tax-free<\/li>\n<\/ul>\n<\/li>\n<li><strong>Interest from savings\u00a0<\/strong>\n<ul>\n<li>Personal Savings Allowance &#8211; basic rate taxpayers earn \u00a31,000 tax-free, higher rate taxpayers earn \u00a3500 tax-free<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n    <\/div>\n<\/div> <!-- .b-highlight-mini -->\n\n<div class=\"c-body\">\n\n\n\n\n<h2 class=\"wp-block-heading\">How much tax do I owe?<\/h2>\n\n\n\n<p>In the UK, you pay different types of tax depending on your different sources of income.&nbsp;<\/p>\n\n\n\n<p>Income tax is the main tax you pay on your earnings. <\/p>\n\n\n<\/div> <!-- .c-body -->\n\n<div class=\"b-highlight-mini m-neutral m-align-left\">\n    <div class=\"b-block-body\">\n        <p><span style=\"font-weight: 400;\">The <\/span><b>income tax<\/b><span style=\"font-weight: 400;\"> rates in the 2025\/26 tax year \ud83d\udc47<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><strong>Income<\/strong><\/td>\n<td><strong>Tax rate<\/strong><\/td>\n<td><strong>Tax band<\/strong><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Up to \u00a312,570<\/span><\/td>\n<td><span style=\"font-weight: 400;\">0%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Personal allowance<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">\u00a312,571 to \u00a350,270<\/span><\/td>\n<td><span style=\"font-weight: 400;\">20%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Basic rate<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">\u00a350,271 to \u00a3125,140<\/span><\/td>\n<td><span style=\"font-weight: 400;\">40%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Higher rate<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">over \u00a3125,141<\/span><\/td>\n<td><span style=\"font-weight: 400;\">45%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Additional rate<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n    <\/div>\n<\/div> <!-- .b-highlight-mini -->\n\n<div class=\"c-body\">\n\n\n\n\n\n<p>When it comes to calculating your tax, you should first add up all the income you\u2019ve earned (minus allowable expenses) and work out the rate at which you\u2019ll be taxed. You can calculate Income Tax based on this &#8211; your overall income. But you\u2019ll only need to work this out yourself if you\u2019re self-employed and not paying tax via PAYE.&nbsp;<\/p>\n\n\n\n<p>Then when it comes to your investments, you\u2019ll be taxed separately on your income from them individually.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What tax do I pay on investment income?<\/h2>\n\n\n\n<p>You\u2019re taxed according to what you invest in and, of course, what you earn profit from.&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong><a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/savings-interest\/\" target=\"_blank\" rel=\"noreferrer noopener\">Interest from savings<\/a><\/strong><\/li>\n<\/ul>\n\n\n\n<p>This is included in your overall income and taxed via Income Tax. The only reason you\u2019d need to do a tax return from savings interest earnings is if you\u2019ve earned over \u00a310,000.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/www.pensionsadvisoryservice.org.uk\/about-pensions\/saving-into-a-pension\/pensions-and-tax\/how-is-my-pension-taxed#:~:text=Normally%2C%20any%20pension%20paid%20to,be%20liable%20to%20income%20tax.&amp;text=Pension%20income%20paid%20to%20you,contributions%20on%20your%20pension%20income.\"><strong>Income from a pension<\/strong><\/a><\/li>\n<\/ul>\n\n\n\n<p>Like with the savings\u2019 interest, your pension is taxed via Income Tax.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Rental or property sale income<\/strong>&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>When you rent a property, you pay Income Tax on the profits that exceed the relevant allowances. If you sell your property, you\u2019ll be liable to pay Capital Gains Tax on any profits that exceed the Capital Gains Tax allowance.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Capital gains from shares or property<\/strong><\/li>\n<\/ul>\n\n\n<\/div> <!-- .c-body -->\n\n<div class=\"b-highlight-mini m-neutral m-align-left\">\n    <div class=\"b-block-body\">\n        <p><b>Capital gains tax<\/b><span style=\"font-weight: 400;\"> rates in the 2025\/26 tax year. It\u2019s paid on profits over the \u00a33,000 CGT allowance \ud83d\udc47<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Type of asset<\/b><\/td>\n<td><b>Basic rate<\/b><\/td>\n<td><b>Higher rate<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Shares<\/span><\/td>\n<td><span style=\"font-weight: 400;\">10%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">20%<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Residential property<\/span><\/td>\n<td><span style=\"font-weight: 400;\">18%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">24%<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Bitcoin\/cryptocurrency<\/span><\/td>\n<td><span style=\"font-weight: 400;\">10%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">20%<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Other<\/span><\/td>\n<td><span style=\"font-weight: 400;\">10%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">20%<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n    <\/div>\n<\/div> <!-- .b-highlight-mini -->\n\n<div class=\"c-body\">\n\n\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Dividends from shares<\/strong><\/li>\n<\/ul>\n\n\n\n<p>On this, you pay Dividend Tax. When you earn between \u00a31,000-\u00a310,000, you can call HMRC who will change your tax code for you. You\u2019ll then pay tax via your salary or your pension. If you earn over \u00a310,000 through dividends, you\u2019ll have to pay via a Self Assessment tax return.&nbsp;Click here for <a href=\"https:\/\/taxfix.com\/en-uk\/dividend-tax-rates\/\">more information on dividend rates<\/a>.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<div class=\"embed-container\"><iframe loading=\"lazy\" title=\"Tax in 10(ish) seconds - What are dividends?\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/rmSTq5Lophw?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n<\/div><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">When do I pay tax on investment income?<\/h2>\n\n\n\n<p>If you have to do a tax return to pay tax on your investment income, you\u2019ll have to make sure that you register for Self Assessment by 5th October in any given year.<\/p>\n\n\n\n<p>This lets HMRC know that you are earning untaxed income that you\u2019ll need to be billed for after the tax year ends. You should pay this tax bill by 31st January.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Tax on investment income varies in the UK. What you pay depends on the type of investment you make money from. Here is a list of taxable investments: But there are also tax-free allowances that affect how much you have to pay.&nbsp; How much tax do I owe? In the UK, you pay different types [&hellip;]<\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[458,460],"tags":[70,418,420,421],"class_list":["post-7951","post","type-post","status-publish","format-standard","hentry","category-investor-capital-gains-tax-returns","category-trading","tag-capital-gains-tax","tag-invest","tag-pensions-savings-winnings","tag-property"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How much is tax on investment income? &#8211; Taxfix<\/title>\n<meta name=\"description\" content=\"Tax on investment income varies in the UK. 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