Tax code in your 65th year

stagey_2 · 6 February 2009 at 3:48PM

Am I correct in thinking that once you reach your 65th year - both husband and I are 64 in March and will therefore be in our 65th year by April 2009 - that our personal tax allowance increase then and we don't have to wait until March/April 2010? My husband is already taking his annuity (and is self employed) and a tax office has allocated him personal allowances of £6475 code 647L for 2009 - 2010.

thank you

The_Whippet · 6 February 2009 at 4:10PM

Correct. You receive age related allowances in the tax year you become 65, regardless of when it is. i.e it is not pro rated.

However for every £2 your income exceeds the income level for age related allowances you lose £1 of your age related allowances until it goes back to the normal Personal allowance. The income restriction is £22900 in 2009/2010

System · 6 February 2009 at 4:47PM

You should receive a form from HMRC called P161 -

http://www.hmrc.gov.uk/forms/p161-man.pdf

It is usually issued when you approach your 65th birthday as by that stage you should have all details re private pensions, annuities and state pension. HMRC would then use that information to determine if you are entitled to all your age allowance or just some of it as it is means tested.

stagey_2 · 6 February 2009 at 5:21PM

The_Whippet wrote: »

Correct. You receive age related allowances in the tax year you become 65, regardless of when it is. i.e it is not pro rated.

However for every £2 your income exceeds the income level for age related allowances you lose £1 of your age related allowances until it goes back to the normal Personal allowance. The income restriction is £22900 in 2009/2010

thanks for this - I will certainly be working for at least another year and earn around £25k so my personal allowance will reduce by approx 1050 (if my maths is any good!!)

The_Whippet · 6 February 2009 at 5:35PM

That's right. Self Employed people do not receive the form P161 form, and as I understand it, it is only sent to you shortly before your 65th birthday, which is over a year away.

Age related allowances are not automatically added to your PAYE code, it is up to you to advise of your level of income. I would telephone the Revenue and tell them your estimated income in 2009/10 is £25000, on this basis your total allowances will be £8440, which is the £9490-£1050. Any unders/overs can be sorted out when you file your 2009/10 Tax Return

As a final point, assuming the £25000 does not take into account your state pension and you carry on working beyond your 65th, it is unlikely that you will have any age related allowances in 2010/2011

stagey_2 · 6 February 2009 at 5:49PM

The_Whippet wrote: »

That's right. Self Employed people do not receive the form P161 form, and as I understand it, it is only sent to you shortly before your 65th birthday, which is over a year away.

Age related allowances are not automatically added to your PAYE code, it is up to you to advise of your level of income. I would telephone the Revenue and tell them your estimated income in 2009/10 is £25000, on this basis your total allowances will be £8440, which is the £9490-£1050. Any unders/overs can be sorted out when you file your 2009/10 Tax Return

As a final point, assuming the £25000 does not take into account your state pension and you carry on working beyond your 65th, it is unlikely that you will have any age related allowances in 2010/2011

That's a thought - I already take my meagre pension (from 60) which amounts to around £66 pw - which is why I keep working for the jam bits! and everything is thro' PAYE and I've never filed a tax return myself - hmm - could things get a bit complicated then?? Thinking I could reduce my working hours and not be too much worse off then??

System · 6 February 2009 at 5:54PM

If you are one of the pensioners who is entitled to some but not all of the age allowance then you will have to complete a tax return as that is the only way HMRC can work out how much age allowance to give you.

If you are either entitled to it all or entitled to none of it then they will not require you to complete a return.

Mikeyorks · 6 February 2009 at 7:38PM

Worth reading these sections (follow the appropriate links) as it's reasonably succinct. But watch that some of the allowances / dates relate, obviously, to 08-09 (there's a link to 09-10) :-

http://www.hmrc.gov.uk/pensioners/index.htm

Tax code in your 65th year

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