Higher tax allowance

marylee

Does anybody know if someone turns 65ys this year, that person is entitled to a higher personal allowance? Will the Income Tax people inform him of this or does he have to write to them? Thanks

pchelpman

Hi marylee

Yes, age 65 does bring about a potential entitlement to higher personal allowances but only if your income is below a threashold. It's a "means tested" sort of thing.

This will give you a little more guidance ......

http://www.direct.gov.uk/MoneyTaxAndBenefits/Taxes/BeginnersGuideToTax/BeginnersGuideToTaxArticles/fs/en?CONTENT_ID=4015583&chk=4rILzi

Hope this helps. If not post again and more help will follow.

Yes, it is always best to flag this kind of thing up with the Revenue just so they know.

On the down side age 65 may well be the start of receiving the state pension. That is taxable income so must be declared and tax paid accordingly.

marylee

Thanks, I hope, they do not count interests from bank and investments as income as well. There seems to be £19500 limits.

Debt_Free_Chick

I'm sorry, but you will have to include interest from bank & savings accounts. Investments are more complicated as some have tax-favourable treatments - but dividends count as income too.

Don't forget that any tax deducted from interest/investments counts as a payment towards your tax bill.

pchelpman

marylee

Yes, ALL income is included in the caclulation of your "total gross income".

And note the word "gross".

Your income, for this purpose, is all taxable income before tax deductions PLUS anything you have received as Chargeable Events on the surrender of all/part of life policy investments [but not Capital Gains liable to capital gains tax.]

It can be a complicated calculation.

marylee

In that case, it seems to be more complicated that I thought. I thought, they will only take hubby work pension in account. Thanks

dunstonh

There are investments where distributions do not impact on the age allowance. So there are ways to reduce the liability.

ctm_2

For the current year, the personal allowance is £4895. For those aged 65-74 it is £7090, and for those over 75 it is £7220.

The income limit for receiving the full age related amount is £19500. For every £2 over that amount, the age related portion of the personal allowance is reduced by £1, until it is reduced to the 'standard' personal allowance.

So, for a total income of £20000, which is £500 over the limit, the age related portion would be reduced by £250, meaning a 65-74 year old would get a personal allowance of £6845, and someone over 75 £6970.

Just add up all income, and do the above calculation.