Over 65 allowances 2011-2012

blackbearbosin

Looking thru Direct.Gov, I see that the under 65's basic allowance will be going up by £1000, which I work out as around a 14% increase.

It appears that over 65's are not receiving any increase in their allowance for the 2nd year. This means the increase in the state pension is in fact a decrease.
Please somebody tell me I have got it wrong!

molerat

Over 65's is increasing to £9940 an increase of £450 or 4.74%. http://www.hmrc.gov.uk/rates/it.htm I believe this government intends to phase out the extra allowance and increase the general allowance to all.

zygurat789

molerat wrote: »

Over 65's is increasing to £9940 an increase of £450 or 4.74%. http://www.hmrc.gov.uk/rates/it.htm I believe this government intends to phase out the extra allowance and increase the general allowance to all.

I thought so too but this is the inflationary increase that you would expect, so perhaps not

Gatser

molerat wrote: »

Over 65's is increasing to £9940 an increase of £450 or 4.74%. http://www.hmrc.gov.uk/rates/it.htm I believe this government intends to phase out the extra allowance and increase the general allowance to all.

It is another TAX HIT on pensioners that we should plan for.

Based on 2011-12 Rates:
If you have £24,000 income, Allowance at £9940 will mean £2812 tax payable

If you have £28,930 income, Allowance will be reduced to £7475 so tax payable = £4291

So, on the extra £4930 of income you will suffer £1479 extra tax
Thats a tax rate of 30% for the "wealthy" pensioner on £29k!

lvader

Gatser wrote: »

Thats a tax rate of 30% for the "wealthy" pensioner on £29k!

I'm probably being thick but how did you work that one out?

Gatser

lvader wrote: »

I'm probably being thick but how did you work that one out?

Pensioner will pay 30% tax on their income between £24,000 and £29,000.
I am not saying 30% tax on ALL income, but it does penalise (unfairly?) the pensioner on £29k, based on the marginal tax they pay.

Is that Ok ?

tuggy12

Gatser wrote: »

It is another TAX HIT on pensioners that we should plan for.

Based on 2011-12 Rates:
If you have £24,000 income, Allowance at £9940 will mean £2812 tax payable

If you have £28,930 income, Allowance will be reduced to £7475 so tax payable = £4291

So, on the extra £4930 of income you will suffer £1479 extra tax
Thats a tax rate of 30% for the "wealthy" pensioner on £29k!

It's not another Tax hit for 2011/12

If you are a pensioner earning £28,930 in the current 2010/11 tax year you will also pay an effective marginal rate of 30% tax on income above this year's eanings limit of £22,900

So it's not a new situation.

FOREVER21

tuggy12 wrote: »

It's not another Tax hit for 2011/12

If you are a pensioner earning £28,930 in the current 2010/11 tax year you will also pay an effective marginal rate of 30% tax on income above this year's eanings limit of £22,900

So it's not a new situation.

Definately not a new situation it has gone on now for at least 4 years.
The Pensioners Alliance has taken this up with MPs but their response was that it was just one of the many querks of our PAYE system.
Personally I think they just did not understand what it was about!!:)

Gatser

tuggy12 wrote: »

It's not another Tax hit for 2011/12

If you are a pensioner earning £28,930 in the current 2010/11 tax year you will also pay an effective marginal rate of 30% tax on income above this year's eanings limit of £22,900

So it's not a new situation.

Gosh... I feel like Mrs Marple has been scrutinising my posting!

In using the word "another"... I was meaning another Tax Hit that we should plan for (as I wrote). I know that some people assume that their tax allowance at 65 will be £9k+ and are not aware that this is wiped out if income exceeds £29k

Yes, its been like this for a while but many still do not realise this...even some MP's it seems!!

CLAPTON

Gatser wrote: »

Gosh... I feel like Mrs Marple has been scrutinising my posting!

In using the word "another"... I was meaning another Tax Hit that we should plan for (as I wrote). I know that some people assume that their tax allowance at 65 will be £9k+ and are not aware that this is wiped out if income exceeds £29k

Yes, its been like this for a while but many still do not realise this...even some MP's it seems!!

Yes it's a completely absurd situation
the special age related tax allowance ought to be abolished and so then there would be no 30% marginal tax rate

I can see no logic in a working person, maybe struggling to pay a mortage etc having a lower tax allowance than an over 65 person on what is not a bad income.

StevieJ

FOREVER21 wrote: »

Definately not a new situation it has gone on now for at least 4 years.
The Pensioners Alliance has taken this up with MPs but their response was that it was just one of the many querks of our PAYE system.
Personally I think they just did not understand what it was about!!:)

It means that a wealthy pensioner pays the same tax rate as someone who has to actually go out to work for a living, I am not sure what is wrong with that?