How Do I Work Out If I'm Paying The Right Amount Of Tax?

bgscotty

Hi,

I know that this might seem like a dumb question... but how do I work out whether I'm paying the right amount of tax?

18 months ago, I retired from work due to ill-health.

I receive a small pension and benefits (Incapacity and DLA).

I also have modest savings.

How do I begin working out whether I'm paying the right amount of tax on the pension, benefits and savings?

Thank you in advance.

bgscotty

toby_puppy

Hello

DLA isn't a taxable income.

You only need to pay tax on the interest received on your savings, not the actual savings.

Incapacity benefit is taxable (after 28 weeks) as are state and private pensions.

The basic personal allowance for 08/09 is £6035 - so you don't need to pay tax on any income below this amount.

So, it depends really how much pension you receive in total and if they have deducted any tax already, it will show on your P60 they send you.

Also, depends on your age, you might get a higher age related allowance (65 and over during the whole tax year)

If you have paid too much tax, you can ask for a tax repayment form from the inland revenue - like a tax return but more straightforward. You can just enter all your income and they will refund you any tax overpaid.