Taxable income is income that you have to pay tax on. In many countries – including the UK – not all your income is taxable.

For every taxpayer in the UK, taxable income is your total income (not just from salary) minus the Personal Allowance (worth £12,500 this tax year). This is automatic – you don’t need to claim it or anything.

In addition to the Personal Allowance, you can also reduce your taxable income by claiming other allowances depending on your situation:

• if you are self-employed you can also claim either expenses or the flat £1,000 Trading Allowance
• if you earn money from renting a room in your own home, you can also claim the Rent a Room Allowance and reduce your taxable income with £7,500
• and many others – see a longer list of tax-free allowances here.