Calculating your Income Tax

What are tax credits?

Tax credits reduce the amount of tax you pay.

Everyone is entitled to Personal Tax Credits. You may also be entitled to extra tax credits if, for example, you are a Pay As You Earn (PAYE) employee, a home carer or aged 65 or older.

To find out what tax credits you are entitled to, see Personal Tax Credits.

Your tax credits are normally given for a full tax year (this is called the 'cumulative basis'). It means that, whether you start work in the first week or the 30th week of the tax year, you still get a full year's tax credits. However, if you are on emergency tax or the Week 1 basis (the 'non-cumulative basis'), different rules apply.

Under the PAYE system, tax credits and deductions are spread evenly throughout the year. If you are working for the full year, your tax credits are divided into 52 weekly or 12 monthly equal amounts, depending on how often you get paid.

You cannot get a refund of any unused tax credits, and you cannot carry them over into another tax year.

Next: What is a tax rate band?