Understanding income tax

For financial advisers only

On completion of this module you should be able to:

  1. explain the different types of income and the order in which they are taxed
  2. determine which income tax allowance a client might be entitled to
  3. calculate a client income tax liability


A client’s income tax status will affect most financial decisions throughout their lifetime - from choosing the most appropriate savings vehicle, funding for their pension or how to take their income in retirement. Understanding how income is taxed is an essential component of any financial planning.

This module should take around 45 minutes to complete. Once you have completed all the sections there is a short self-assessment quiz to check what you have learned and a CPD certificate for up to 45 minutes can be claimed.

This module explains how income tax is calculated including the order of taxation plus the rates and allowances for each source of income.

Please read our Introductory guide to income tax before moving on to the next part of this module.