Income tax income categories (UK)
For the Finance Act 2025 basis used in TX-UK June 2026–June 2027, a computation commonly distinguishes non-savings income, savings income and dividend income. Employment, trading, property and pension income are generally non-savings; bank interest is generally savings income, and qualifying dividends are dividend income. Generally non-savings income is taxed first, followed by savings income and then dividends. The ordering and relevant bands affect the tax calculation; exemptions, allowances and nil-rate bands require separate application.
Worked example
An individual has £25,000 employment income, £1,000 bank interest and £500 dividends. The adviser groups these as non-savings, savings and dividend income respectively, then applies the relevant allowances and tax bands rather than using a single rate for the total.
Common mistake
Treating all income as taxable at one rate, or assuming a nil-rate band means the income is omitted from the computation.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | TX (UK) | Direct | June 2026–June 2027 |