a quick question re tax and an OAP

TAZ

my mum is 79 and is a widow , she receives her normal old age pension and also a couple of small careers pensions that she paid into both around £40 a month each she also receives a pension from my departed dads work that should be about 235 but she actually gets about £180 after tax, her other pensions are also taxed. she is not entitled to any benefits except attendance allowance that she has just this month started to claim. what i would like to know is how we go about finding out if she should be paying the amount of tax she is and if not how does she get it changed. i just feel terrible for her stuggling to pay everything when she has worked so hard to get herself a little extra for her old age.

jem16

Can you tell us what her total income, before tax, is?

dunstonh

She can earn £7420 p.a. with no tax to pay. Then £2150 at lower rate tax and then basic rate tax above that.

The state pension is paid gross but is classed as taxable income and would wipe out much of the personal allowance.

jenniferpa

Actually, from the figures you state, that doesn't seem right. It sounds as if she's getting around £8161 per annum (pre-tax). That's state pension (84.25) + 2 small pensions (960) + dad's pension (2820). The attendance allowance will be non-taxable. This presupposes that she gets the full state pension. Rough calculation shows that only 741 should be being taxed at 10% Therefore, she should only be paying £74 a year in tax. You need to check her tax code. This is the link to the IR leaflet income tax and pensioners. Note it's for last year http://www.hmrc.gov.uk/pdfs/ir121.pdf

Jennifer

PS She should also be entitled to the cold weather payments etc which are also not taxed.

TAZ

i don't have her figures to hand so at the moment i can't give you all the details. i will however get them when i go to see her and thank you for the posts so far as i can see from that i was right in thinking she is paying too much tax, i beleive she is problay over her allowance but she is still paying a lot more than she should my dads pension is deducted by 52 in tax every month. is there a way she can get a reveiw on her taxes, she used to own a private old peoples home until my dad died and her tax was worked out by her accountant but that has not been done for the last 14 years so could that be where the tax comes from.

jenniferpa

All sorts of things could be wrong with it. The most common is that she's not getting her approprate age allowance. That link (leaflet) tells you how to go about getting a review. You could also go to http://www.taxvol.org.uk/ who will give free tax help to older people on low incomes.

Jennifer

dunstonh

Those rates are taken from the 2006/2007 tax tables and apply from 6th April 2006.