Age related personal allowance

Mikeyorks

trevormax wrote: »

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.

For most people currently outside of SA .... a one-off P161 is all that will be issued. Enrolment to SA is then only likely if total tax can't be recovered via coding out from employment / non-State Pension.

John_Pierpoint

dunstonh wrote: »

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.

When my dear old mum had this problem, she bought some National Savings products to reduce her taxable income and a split Investmet Trust.
The latter had two classes of shares one sold to pension funds and the like that carried all the income and the other that got all the capital gains. Each month the company sold (say) 200 GBP of shares and the (hopefully) increase in value of the shares counted as capital gain and helped mop up a bit of her annual zero rate band of Capital Gains tax.

notbritishgas

margaretclare wrote: »

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.

But the allowance is means tested, anyone earning more than £22900 has the allowance reduced by£1 for every £2 over the limit until eventually the extra allowance is reduced to nothing meaning the standard allowance applies.

Edit, sorry just realised others had picked up this point.

margaretclare

notbritishgas wrote: »

But the allowance is means tested, anyone earning more than £22900 has the allowance reduced by£1 for every £2 over the limit until eventually the extra allowance is reduced to nothing meaning the standard allowance applies.

Edit, sorry just realised others had picked up this point.

Well, £22,900 in retirement - no mortgage costs etc - is a pretty decent income for one person. If there's two of you it applies to you as individuals. I think the suggestion about National Savings was a good one. Otherwise, a couple of weeks ago you could have stuck £14,400 into ISAs, £7,200 for the year just gone and £7,200 for the present one.

crazygaijin

margaretclare wrote: »

Well, £22,900 in retirement - no mortgage costs etc - is a pretty decent income for one person. If there's two of you it applies to you as individuals. I think the suggestion about National Savings was a good one. Otherwise, a couple of weeks ago you could have stuck £14,400 into ISAs, £7,200 for the year just gone and £7,200 for the present one.

I am just turning 65 soon my wife is only 60, is my allowance about 9k total for both of us or each?

I will start getting state pension soon and a small other pension less than state. I also will have about 200 per week profit coming in from rental properties.

Will I have to pay 20% tax on the profit over my allowance?

System

crazygaijin wrote: »

I am just turning 65 soon my wife is only 60, is my allowance about 9k total for both of us or each?

I will start getting state pension soon and a small other pension less than state. I also will have about 200 per week profit coming in from rental properties.

Will I have to pay 20% tax on the profit over my allowance?

You are both taxed as individuals. At 65 you would become eligible for the Age allowance on top of your personal allowance (£9490 in total) but your wife , being under 65, still only has a personal allowance of £6475 in the 2009/2010 tax year.

If you haven't already received one you should expect HMRC to send you a P161 Pension enquiry form in the post soon.

crazygaijin

Pam17 wrote: »

You are both taxed as individuals. At 65 you would become eligible for the Age allowance on top of your personal allowance (£9490 in total) but your wife , being under 65, still only has a personal allowance of £6475 in the 2009/2010 tax year.

If you haven't already received one you should expect HMRC to send you a P161 Pension enquiry form in the post soon.

Sory if I am a bit slow, but could you please clarify?

So I will have 9490 allowance when I hit 65 and my wife has the 6475 allowance, so we can have about 16K income before paying any tax? And in 5 yrs time when the wife hits 65 we can both get 9490, total alomost 20K tax allowance?

I thought until I read on here that we only had about 7K allowance total for both of us?

RayWolfe

You are correct but, you can't add the allowances together. You have one allowance on your income and your wife has another allowance on her income.

margaretclare

RayWolfe wrote: »

You are correct but, you can't add the allowances together. You have one allowance on your income and your wife has another allowance on her income.

As others have said already.....

jennifernil

If your wife is not working and has no pension of her own, she will be able to claim a pension on your contributions once you are 65.