Types of Income

Types of Income

Employment Income

  • Salaries and Wages: This is the income that employees earn for the work they do. These can be hourly, daily, weekly, or monthly and includes overtime pay.

  • Bonuses and Commission: These are additional types of income given to employees based on their performance.

  • Benefits in Kind: These are non-cash benefits provided to employees, such as a company car or private health insurance.

Investment Income

  • Interest: This is income earned from depositing money in a savings account or bonds.

  • Dividends: These are payments made to shareholders (if you own shares), when a company makes a profit.

  • Capital Gains: This is the income gained when a capital asset, like shares or property, increase in value.

Pension Income

  • State pension: This is the regular income that individuals are entitled to receive from the state when they reach the state pension age.

  • Company/Private pensions: These are pensions that you or your employer contribute to during your working life.

  • Annuities: A type of retirement income which pays a regular income in return for a lump sum investment.

Property Income

  • Rental Income: Income gained from letting property to tenants.

  • Sale of Property: This is income that results when you sell property for more than the purchase price.

Welfare Benefits

  • Universal Credit: A payment to help with living costs for those below a certain income level or out of work.

  • Child Benefit: A government payment to those responsible for children.

  • Jobseeker’s Allowance: A benefit for those who are out of work and actively looking for employment.

Other Types of Income

  • Inheritance: Money or property received from the estate of a person who has died.

  • Lottery/Prize Winnings: These are considered income and can be taxable depending on local laws.

Key Terms to Remember

  • Salaries and Wages, Bonuses, Benefits in Kind, Interest, Dividends, Capital Gains, State pension, Company/Private pensions, Annuities, Rental Income, Universal Credit, Child Benefit, Jobseeker’s Allowance, Inheritance, Lottery/Prize Winnings.