How employers calculate how much tax to take off

The Inland Revenue produce 'tax tables' for your employer to use every pay day. These show the tax-free pay for each week or month and how much tax to deduct.

What income is taxable?

The most common forms of taxable income are:

• Earnings from full or part-time work, including tips and bonuses
• Profits from a business
• Dividends from shares in a company
• Interest from National Savings investments (except NS Certificates and the first £70 of Interest from ordinary accounts with the National Savings Bank)
• Jobseeker's Allowance (JSA) Interest from savings with a bank or building society.

REMEMBER: You can claim back tax you've overpaid

If you are sure that your total income, including your interest and holiday earnings, will be less than your personal allowance (£4,335 in 1999-00) you can arrange for your interest to be paid without tax taken off.