Tax refund query

libra10

I might be wrong here, it wouldn't be the first time!

The government were going to refund approximately £60 to low earners and pensioners under 65 (that's me) who didn't benefit from a higher personal allowance in the new tax year. My son received the extra £60 in his salary at the end of September but I don't seem to have received any extra in my pension up to date.

Should I have done or have I got the wrong end of the stick?

Thanks for any help.

chrisbur

What tax code is being used on your pension? How mutch is your pension and what tax was taken this month and last month? Do you have any other taxable income?

BoGoF

Do you receive any payslips in respect of your pension, if so can you tell us your tax code in both your August & September payslips and your gross pension and tax paid on each payslip.

libra10

Thank you chrisbur and boGoF. I receive a reduced state pension of approximately £84 weekly. No tax is taken and I have no other personal pensions, although OH has. We have savings interest - the money which isn't in ISAs is taxed at source though.

I'm fully retired and don't receive any payslips; am 62 years old and presume my personal allowance will be standard one before a person reaches the age of 65. Then the personal allowance is around 9000, I believe. I must have a tax code and when I find it will post the details.

Thank you very much for your help.

BoGoF

libra10 wrote: »

Thank you chrisbur and boGoF. I receive a reduced state pension of approximately £84 weekly. No tax is taken and I have no other personal pensions, although OH has. We have savings interest - the money which isn't in ISAs is taxed at source though.

I'm fully retired and don't receive any payslips; am 62 years old and presume my personal allowance will be standard one before a person reaches the age of 65. Then the personal allowance is around 9000, I believe. I must have a tax code and when I find it will post the details.

Thank you very much for your help.

So your only income is the state retirement pension and you haven't paid tax in the current tax year? Sorry to disappoint you but if that's the case then you will receive no tax rebate. The "£60 rebate" was only due if you had actually paid tax and was to compensate for the abolition of the 10% band.

I hope you claim a refund in your interest which is taxed at source?

libra10

Thanks very much for the information boGof - it's really helpful. Unfortunately (or, fortunately) as the case may be, when I check out the figures, I don't seem to be within the figures where I would be eligible to fill in the form to have no interest deducted from savings, or be able to claim a tax rebate on interest.

Thanks once again, much appreciated.

chrisbur

As advised by BoGoF you need to claim some of your interest tax back at the end of the year, and perhaps look at past years to see if you are owed any for these.
As far as the "£60 tax" goes you may benefit from it depending on how much interest you get. Your pension of £84 pounds is £4368 a year. Assuming that you have the normal under 65 tax code you would have got back the tax taken from £1071 of interest but now with the change you will get back the tax taken on £1671. As I said this will depend on how much interest you are getting, and assumes that you do not have savings interest that takes you into the 40% tax bracket.
If you are not using all your tax allowance but your OH is may be worth considering moving some savings to you so you both benefit from your full allowances.

chrisbur

libra10 wrote: »

Thanks very much for the information boGof - it's really helpful. Unfortunately (or, fortunately) as the case may be, when I check out the figures, I don't seem to be within the figures where I would be eligible to fill in the form to have no interest deducted from savings, or be able to claim a tax rebate on interest.

Thanks once again, much appreciated.

I understand that you cannot fill in the form not to have tax deducted from interest presumeably because your pension plus the interest total more than £6035; but that does not mean that you cannot claim some of the tax back at the end of the year.

Mikeyorks

libra10 wrote: »

I don't seem to be within the figures where I would be eligible to fill in the form to have no interest deducted from savings, or be able to claim a tax rebate on interest.

Are you sure?

If your only income is the £84 State Pension then (£4368) that leaves £1667 of your Personal Allowance (PA) to set off against Interest. (equivalent £28k gross @ 6%). You may exceed that outside ISAs and therefore be ineligible to complete an R85? ...... But don't forget there is a further £2320 allowance at 10%, in cases such as yours, where the only income above your PA is Savings interest.

So if I've read your circumstances correctly - you can't be ineligible for both the R85 and a potential refund (after 5th Apr) for part / whole of the 10% Savings band !! Suspect you fit the latter - and will be able to claim back some of the tax deducted from interest at 20% ...... whereas some or all of it will fit into the £2320 band only taxable at 10%.

libra10

Thanks again everyone - some very interesting information. When calculating annual income I understand that for tax rebate purposes, any cash ISA interest is totally disregarded?

I think that even disregarding ISAs my other savings income would exceed the figures stated by Mikeyorks. It looks like I need to calculate exactly what my savings income was during April 2007 to April 2008. Luckily I keep a spreadsheet. Even if the figures exceed my personal allowance for the above tax year, I can still claim a tax rebate for interest paid up to my PA.

Can you please advise whether I understand correctly?

chrisbur

Yes that's it exactly; you can claim for this overpaid tax.
Also well done Mikeyorks, I had forgotton about the 10% band for savings.