why so much tax !age related allowances etc

noh

stagey wrote: »

thank you - but too late came the cry - as I took my pension at 60!

No you are not too late. You can defer your pension after having started it.

From page 21 of:- http://www.thepensionservice.gov.uk/pdf/spd/spd1may08.pdf


"What if I am already claiming my State Pension?
If you are already claiming State Pension, you can decide to stop claiming for a while to earn more money for your future.
You can:
• stop your State Pension by telling us the date you want to stop claiming from (this cannot be a date in the past or more than 4 weeks in the future), and
• only stop claiming once."

stagey_2

thank you all - I can see now - having worked thro' various computations that by trying to reduce the tax implication either by working fewer hours or giving up the pension for a while I would simply end up with less net per month anyway.(of course!) hey ho.

Out of interest why do HMRC tax 50% of your income once it is £22900 and if you're receiving your pension - it's hardly a fortune -

jem16

stagey wrote: »

Out of interest why do HMRC tax 50% of your income once it is £22900 and if you're receiving your pension - it's hardly a fortune -

Where did you get this idea from?

At £22,900 you pay 20% tax on everything above your personal allowance, which in your case is £6740.

You have to have an income of £150,000 to be paying 50% tax and not till 2010.

suso

stagey wrote: »

thank you all - I can see now - having worked thro' various computations that by trying to reduce the tax implication either by working fewer hours or giving up the pension for a while I would simply end up with less net per month anyway.(of course!) hey ho.

Out of interest why do HMRC tax 50% of your income once it is £22900 and if you're receiving your pension - it's hardly a fortune -

your not being taxed at 50%
eg if you earn 22900 (the maximum this year before age related allowances are reduced) you pay tax of approx 2682
if you earn 23900 (one thousand pound more) you pay tax of approx 2782

so on the extra 1000 pound above the threshold of 22900 you are actually being taxed at 10 %

stagey_2

at least I can stop concerning myself now - it seems that it is what it is - and thank you all for helping me comprehend! regards

noh

suso wrote: »

your not being taxed at 50%
eg if you earn 22900 (the maximum this year before age related allowances are reduced) you pay tax of approx 2682
if you earn 23900 (one thousand pound more) you pay tax of approx 2782

so on the extra 1000 pound above the threshold of 22900 you are actually being taxed at 10 %

That is not correct
On £22900 pa a person eligible for age related allowance would pay tax of £2682 as you say.

If they earned £23900 (£1000 more) the tax paid would be £2982.
An extra £300.
A marginal rate of 30%

This is made up of the 20% normal rate and 10% extra due to the removal of the age related allowance at a rate of £1 for every £2 income over the threshold.

suso

noh wrote: »

That is not correct
On £22900 pa a person eligible for age related allowance would pay tax of £2682 as you say.

If they earned £23900 (£1000 more) the tax paid would be £2982.
An extra £300.
A marginal rate of 30%

This is made up of the 20% normal rate and 10% extra due to the removal of the age related allowance at a rate of £1 for every £2 income over the threshold.

your right, thats what happens when you don't check all the matching parentheses in excel and drink a crate of red horse until 11 pm. :beer:

stagey_2

OK - so it's 30%? why is that - ?

jem16

stagey wrote: »

OK - so it's 30%? why is that - ?

As noh already explained it's because you have too much income to be entitled to the increased personal allowance.

John_Pierpoint

and you have passed into/through the pensioners poverty trap where each extra 2 GBP takes 1 GBP off your personal allowance, so that is 2 x 20p paid on the 2 GBP plus 20p payable on the previously tax free pound making 60p paid on 2 GBP of income ie 30%.

Rich pensioners are not welcome, much better to tax them all until they have to claim benefits and then obtain some sort of benefit. This means that the pensioner will vote for the government rather than risk losing their benefit.