Age related personal allowance

notbritishgas

Can someone confirm what is classed as income when working out if you qualify for the extra allowance.
I assume that normal income and pensions qualify (using the gross figure?), and does interest from Building Societies also count? If so what about interest from tax free ISA's.
Just a final thought what about share dividends.
Thanks.

dzug1

All the above count except ISAs

notbritishgas

dzug1 wrote: »

All the above count except ISAs

Thanks dzug, if you realise the income is too great can you opt out so you do not have to go through the process of form filling to declare your income.

jem16

Opt out of what - the age related allowance?

I doubt HMRC will allow you to opt out. They still need to know your total income to be able to tax you correctly.

mrkbrrws

All taxable income counts and you take the gross amount.

Dividends are taken as the gross figure so you have to add the tax credit (1/9th) to the amount actually received.

Any income arising on ISAs is ignored.

If your income is high enough that you should only receive the minimum level of personal allowance you should contact HMRC so your tax code includes the correct allowance.

notbritishgas

jem16 wrote: »

Opt out of what - the age related allowance?

I doubt HMRC will allow you to opt out. They still need to know your total income to be able to tax you correctly.

Thanks to all. What I meant was that if I realise my income is too high to get anything other than the standard personal allowance (quite likely) can I just tell HMRC that I do not want any additional allowance and hence not have to fill in any forms regarding income.

jem16

Unfortunately no.

Tax regulations state that you are entitled to the increased personal allowance because of age and you must be seen to be getting it unless your income is too high.

You should be able to just fill in the short tax return though.

dunstonh

distributions on investments held inside the pension or life assurance tax wrappers do not count towards income as well as ISAs. So, if its investments that are taking your over the limit that sees your age allowance reduced, then there are often ways to bring it down to save yourself £1000 a year in tax.

margaretclare

notbritishgas wrote: »

Thanks to all. What I meant was that if I realise my income is too high to get anything other than the standard personal allowance (quite likely) can I just tell HMRC that I do not want any additional allowance and hence not have to fill in any forms regarding income.

This makes no sense! The additional personal allowance for over-65s is to ensure that we pay LESS tax, not MORE!

For example, in the current tax year, under-65s have £6,475 personal allowance. Someone of 65+ has £9,640.

dzug1

It does make sense - over a certain figure (used to be £22K odd) you start losing the age allowance until eventually you just get the under 65 figure.

OP doesn't want the bother of a tax return to assign him then take away the extra allowance - he's rather not have it in the first place.

trevormax

I can see where the OP is coming from but HMRC wouldnt go sending out complicated SA forms for this situatuation, they would send out a form P161 i believe. This just asks a few simple questions like name, partners name, your pension and state pension details and any other income you earn or gifts to charity you make. 2 pages is all it takes. Here it is http://www.hmrc.gov.uk/forms/p161-man.pdf

The age related allowances start to get reduced at £22,900 of relevent income but only by 1 allowance for every £2 over this amount. So for someone 65-74 they would have to earn £28,930 and for 75 and over £29,230 before they hit the basic PA. Well worth the hastle of a couple of pages of simple information if it could potentially save you £'s in tax