Mothers Tax

nxdmsandkaskdjaqd

Just wanted a check on my mothers tax situation.  Have I done anything incorrect?

Thanks

Dazed_and_C0nfused

You seem to be mixing up pension income on which tax is due and tax due on pension income.

And Total taxable income £2,906 doesn't make sense 

kimwp

Check if the starting rate for savings is applicable.

nxdmsandkaskdjaqd

So I should remove pension income on which tax has been paid from the calculation?

the £2350.58 is the £2054 + £853 - £555.80 making £2350.58

nxdmsandkaskdjaqd

kimwp said:

Check if the starting rate for savings is applicable.

Your right the starting savings rate is not applicate as she has £2598.75 of interest.

molerat

Yes, it is wrong.

Her total income is £2799.71 + £11823.87 + £4264 = £18887.58 so she has no starter rate for savings available, everything above the £1000 PSA is taxable.

Tax due is income £18887.58 - £12570 = £6317.58 x 20% = £1263.52 + interest £2598.76 - £1000 = £1598.76 x 20% = £319.75  = total £1583.27 - £555.80 paid = £1027.47 due.

Dazed_and_C0nfused

nxdmsandkaskdjaqd said:

So I should remove pension income on which tax has been paid from the calculation?

the £2350.58 is the £2054 + £853 - £555.80 making £2350.58

No, that's not what I meant.

I was referring to the fact that you have told us she has pension income of £14,624 (rounded up for simplicity).

Which is £2,054 above her Personal Allowance.

And you think her tax liability on the pension income is £2,054 😳

Also, you are making life more complicated by splitting out Carers Allowances, that is part of the same type of income (non savings non dividend income) as the pensions.

With non savings non dividend income of £18,888 she cannot benefit from the savings starter rate band.

Dazed_and_C0nfused

You should also check the Carer's Allowance situation.  You can't normally (ever?) receive that amount of State Pension and Carer's Allowance.

Or is whichever tax year you are referring to the first year she got State Pension and she was getting Carer's Allowance prior to that.  In the same tax year?

That could have a double benefit as it might free up some savings starter rate band.

incus432

In future with that much interest she might benefit by putting some or all of those savings into cash ISAs instead, where interest is not subject to tax

nxdmsandkaskdjaqd

I have got it now thanks for the help.

Keep_pedalling

Dazed_and_C0nfused said:

You should also check the Carer's Allowance situation.  You can't normally (ever?) receive that amount of State Pension and Carer's Allowance.

Or is whichever tax year you are referring to the first year she got State Pension and she was getting Carer's Allowance prior to that.  In the same tax year?

That could have a double benefit as it might free up some savings starter rate band.

She earns way too much to get CA

All of the following must apply:

• you’re 16 or over
• you spend at least 35 hours a week caring for someone
• you’ve been in England, Scotland or Wales for at least 2 of the last 3 years (this does not apply if you’re a refugee or have humanitarian protection status)
• you normally live in England, Scotland or Wales, or you live abroad as a member of the armed forces (you might still be eligible if you’re moving to or already living in an EEA country or Switzerland)
• you’re not in full-time education
• you’re not studying for 21 hours a week or more
• you’re not subject to immigration control
• your earnings are £151 or less a week after tax, National Insurance and expenses