Income

Income is any money you have coming in. That includes your earnings, income from pension savings, interest from some savings products, rental income, some state benefits and pretty much anything else really.

It’s worth remembering you can take up to 25% of your workplace pension savings as a tax-free lump sum, but anything after that is classed as income, which may be taxable. You’ll still have your personal allowance of tax-free income though – the standard personal allowance is £11,850 a year – so you might be able to plot a course that maximises your pension savings.

You might come across the terms adjusted income and threshold income, which interpret what counts as your income in slightly different ways.