UK Accounting Glossary
Earned income is wages, salary, tips, fees or other compensation generated as a result of the active performance of labour or a service. Earned income is payment for work or service already completed. Earned income also includes profits from your own business or trade which you have materially participated in producing. Earned income ceases if the labour or service for which it is paid stops. Earned income can include money, property, and even an exchange of goods of services. Another term for earned income is active income. Earned income is in contrast to passive income or unearned income, such as interest, dividends, annuities, rents and other income from savings or investments which continues regardless of whether or not work or a service is actively performed.
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This glossary post was last updated: 9th February 2020.