Over 65 Tax Allowance

System

In order to ascertain how much of your age allowance you are entitled HMRC send out a P161 - http://www.hmrc.gov.uk/forms/p161-man.pdf. You will see that it asks for details of all your income including investments. If you have those details download the form, complete it and send it in to your office.

I think HMRC would be reluctant to give you full age allowances and then find out later that you aren't entitled to them that's why the P161 is generally sent out closer to the 65th birthday when the taxpayer would be more likely to know how much state pension they would be getting.

When they receive the form and see that you are entitled to full age allowances your tax code will be changed accordingly and you would receive any refund due through your PAYE source of income. That refund will cover the period back to the beginning of the tax year so you will not lose out on any entitlement.

boobbby

My wife has just had her code for 2009/10 and has been given a personal allowance of £6475. As she is 65 at the end of March 2010 then she should have received a personal allowance of £9490. Mr Taxman knows her total income is only about £9400 (includes state pension) a year so there is no need to worry about age related income allowance. Yes!! I know she will eventually be given the correct code but why should we have to chase them to be given the correct code. I bet many people dont even realise that if you 65th birthday falls in the tax year they are intitled to the higher allowance

AirlieBird

You don't have to chase them. They will send her a form shortly before her 65th birthday if they have her date of birth.

boobbby

AirlieBird wrote: »

You don't have to chase them. They will send her a form shortly before her 65th birthday if they have her date of birth.

Your missing the point!! She should be getting the allowance from the 5th April 2009 (not when she is actually 65) Of course they know how old she is both from her NI number and that she has been getting a pension since she was 60. The also know that her age related allowance does not need to be taken into account !!

sunshinetours

boobbby wrote: »

Your missing the point!! She should be getting the allowance from the 5th April 2009 (not when she is actually 65) Of course they know how old she is both from her NI number and that she has been getting a pension since she was 60. The also know that her age related allowance does not need to be taken into account !!

But they do not know how much income she has had in the current year upto her 65 birthday which is why they send the form the others have correctly mentioned. She will get the allowance from 6/4/09 (not the 5th!) but it will have to be backdated once she reaches 65. Think of it as a savings plan for the year as she should get a nice lttle tax rebate!

sebastianj

Interesting, did not know this, so if someone turns 65 in January 2009, his tax allowance will start from 6th April 2008, is that right? What about women, does that start from 60? and what if she is not entitled to a state pension?
rgd
seb

boobbby

sunshinetours wrote: »

But they do not know how much income she has had in the current year upto her 65 birthday which is why they send the form the others have correctly mentioned. She will get the allowance from 6/4/09 (not the 5th!) but it will have to be backdated once she reaches 65. Think of it as a savings plan for the year as she should get a nice lttle tax rebate!

Your quite right in all you say but will the tax rebate including interest equal say the extra money she would have received each week if she had the allowance and which she could have invested in say a 6% monthly saving plan with Barclays. I would also like to make the point that with the full allowance applied from 6th April 2009 then she still would have had some left over to allow her to receive the interest on some of her savings without tax being deducted.

Mikeyorks

boobbby wrote: »

.... but will the tax rebate including interest equal say the extra money she would have received each week if she had the allowance

No. But nor will they charge her interest if you get the allowance up front and make a mess of her potential income, resulting in an underpayment. As the State Pension forecast is not wholly straightforward ... being taxable on accrual as opposed to the payment basis that's more usual to PAYE.

If you're that irate at not getting the allowance drip fed over the year ... then get a P161 completed and submitted. But you'll probably need a pension forecast which you'll need to submit alongside .... as Pensions Service won't normally formalise figures to HMRC at this distance to March 2010.

boobbby

Mikeyorks wrote: »

No. But nor will they charge her interest if you get the allowance up front and make a mess of her potential income, resulting in an underpayment. As the State Pension forecast is not wholly straightforward ... being taxable on accrual as opposed to the payment basis that's more usual to PAYE.

If you're that irate at not getting the allowance drip fed over the year ... then get a P161 completed and submitted. But you'll probably need a pension forecast which you'll need to submit alongside .... as Pensions Service won't normally formalise figures to HMRC at this distance to March 2010.

Not really understanding why she needs a pension forcast as she has been receiving her state pension since she was 60. She also has a small pension from her work since she retired of about £2000 per annum. When I went through the same scenario last year then a quick phone call to the phone number on her coding notice sorted it.

Mikeyorks

Apologies .... I'd assumed your reference to State Pension in post #14 was anticipatory.

In which case just download a P161 and send it in .... as you can provide an accurate forecast of the year ahead earnings? I'm assuming (again!) that :

When I went through the same scenario last year

..... any variation to her State Pension as a result of you receiving it ... is already in place.