Tax and Pensions

rias_2

I am due to get my national pension in Nov 06, As far as I know my personal pension allowance increases but any income over £19500 decreases the tax allowance by £1 for every £2 extra income.
I am very near to that limit but by the way of An occupational pension which is taxable and two medical pensions which are both tax free, I also have savings and bonds which will bring in interest which is taxable.
Should I put these in my wifes name, she doesnt pay tax,??? :eek: :eek:

rias

dunstonh

As far as I know my personal pension allowance increases but any income over £19500 decreases the tax allowance by £1 for every £2 extra income.

Its taxable income that matters. A number of investments, such as ISAs and investment bonds are not included. Often it can just be a case of changing the investments to an appropriate tax wrapper. Plus utilising the income allowances of your spouse.

rias_2

So does that mean that my tax free medical pensions don`t count in my income bracket?

dunstonh

I assume they are "tax free" because they utilise your personal allowance. That doesnt mean they are tax free. It means they are being paid with no tax deducted but they are classed as taxable income.

When the state pension kicks in, that will eat most of your personal allowance and you will almost certainly find yourself paying tax on the medical pensions.

EdInvestor

Just to note that for 2006-07 the over 65 personal tax allowance is now 7280 and the threshold for age allowance has gone up to 20,100.