People do not have to pay income tax on all their income. Everyone gets a tax allowance which allows them to have some income they do not have to pay tax on. However, the amount varies depending on personal circumstances.
What you can earn before paying income tax on earned or investment income. Single people have an allowance of £4,195 during the 1998/99 tax year. Married couples, people with dependent children, and people aged 65 or more qualify for additional allowances.
Everyone is entitled to receive an amount of income before being liable to tax. For 1999/2000, the personal allowance is £4,335. For 2000/2001 is it £4,385.