How to sort out my Dad's tax

youreds

Hi, just looking for pointers here of how to sort out my Dad's finances, as I don't have all the figures to hand.
He is retired & was widowed 2 years ago, up until he was widowed he got his state pension & a small amount from a company pension & paid no tax.
When he was widowed, he started getting a portion of my mum's company pension, this is around £300 a month, but he is paying tax on this. He also has around £42k savings & is paying tax on the interest, when I don't think he should be.
Sorry for the lack of detailed figures at present...
Can anyone give me pointers as to how I can resolve all this for him, who we need to contact etc. He's not very good with dealing with all the different organisations, so I'll have to do all the form filling, letter writing etc.

Thanks in advance

Youreds!

sarahlouise210

You need to contact the tax office who deals with your mums company pension that your dad now receives. Based on the information you have supplied I would be surprised if he did not have to pay some tax on the interest on his savings. It will depend how old he is as to how much he can recive tax free. If he is over 65 but under 75 by April 2006 he can receive £7090 (from all sources) tax free if he is over 75 £7220. If he receives more than this he may still have some tax to come back.. really need more information re his age and the amount of interest received(and confirm if any of this is from dividends as this is not refundable)

margaretclare

Hi youreds

How old is your Dad? If he's 65 and under 74 his Annual Tax Allowance for 2005 - 2006 is £7090. If he's 75 and over the allowance is £7220.

The Tax Office (HM Revenue and Customs) - his local tax office - need to be told if he has recently become 65 because they don't always know. If they don't know then they can't apply the correct allowances. Try their website: https://www.hmrc.gov.uk

I can't tell from the figures you give whether your Dad should be paying tax or not. But you can probably see that he can receive £7090 from all sources before he starts to pay any tax. Tax is charged at 10% on the first £2020 in any case.

You need to work out what your Dad's income is over the whole year. You say your Mum's pension, which he has inherited, is about £300 a month - that's £3600 a year. Basic state pension is £4266 a year. Then he gets a small amount from a company pension of his own.

Don't forget that he won't be getting the married people's tax allowance any more now he's widowed. It doesn't look as if he'd have a lot of tax to pay in any case.

Best wishes

Aunty Margaret

youreds

Many thanks for the initial responses, he turned 75 on March 21 this year. I'll drop in & get hold of some more detailed figures from him later.

Youreds!

margaretclare

Hi youreds

Your Dad's tax allowance for his age will be £7220 for this current tax year i.e. that's the amount he can have coming in before he starts to pay tax. The first £2020 after £7220 is charged at 10%, from £9240 onwards it's at 22%.

The Tax Office do need to be told what age he is - they don't automatically know!!

Aunty Margaret

Debt_Free_Chick

It looks like he should be paying some tax. His income appears to be

Basic State Pension £4266
Widower's Pension £3600
Interest £2100 (assumes 5% on £42k savings).

Total (?) £9966

I agree though. You or he ought to visit the tax office and make sure he's not paying too much.

Regards

youreds

Thanks again for the responses, I now have some more detailed figures, which wasn't easy, his wasy of dealing with stuff is to pile all the letters in a cupboard & do nothing :eek: . All I need to know is who to go & see/write/phone & in what order. Do the tax office inform pension people of code changes etc.

For last year...

State Pension £576.88 x 13 = £7499.44
Late mum's pension £279.20 x 12 gross, £217.82 x 12 net Tax code on slips of BR (Emergency tax??) = £3350.40 GR £2613.84 net
Company pension £118 net x 12 = £1416 small amount of tax deducted, didn't bring exact figure :mad:

As for his savings, these were in an account with no tax deducted, but I moved them to a higher interest account, which now has tax deduced. Gross interest last year was £2076, less £415.28 tax.

Current account has no tax deducted.

There's more..

His PAYE coding notice has a Tax code of 80T, on this there is mention of married allowance:

Tax allowances
Personal allowance £7220
Married allowance £5975 (allocated to wife provisionally 1237)
Total £13195

Deductions:
State pension/benefits £7727
Untaxed interest £2215
Allowance restriction £2449
Total £12391

Tax free amount £804.

Tax coding is a black art to me, but the above looks like it needs serious sorting!

HTH, so who is my first call to tomorrow :question:

Youreds!

sarahlouise210

in a rush but based on your figures (an without knowing the EXACT tax deducted n the company pension) I would say your dad is either owed a small amount back (£50 ish) or will owe a similar amount - this is because the fact that he has paid tax on his interest is counteracted by the fact that he had Married couples allowance in his code incorrectly. Post the actual figures for the company pensions tax deducted and I will give you an actual figure tonight

youreds

sarahlouise210 wrote:

in a rush but based on your figures (an without knowing the EXACT tax deducted n the company pension) I would say your dad is either owed a small amount back (£50 ish) or will owe a similar amount - this is because the fact that he has paid tax on his interest is counteracted by the fact that he had Married couples allowance in his code incorrectly. Post the actual figures for the company pensions tax deducted and I will give you an actual figure tonight

Hi there, it turns out he's only just started paying tax since it went up in April, so there was no tax last year.

I'll get on the phone to the Tax office for him tomorrow & get the ball rolling.

I'd just like to know how the tax on the interest will be calculated once he is sorted? Should he just be paying it & get anything owed to him back at year end? Do we need to let his bank know about any changes, as he pays no tax on his (very little) current account interest, but does on his savings.

Cheers

Youreds!

ctm_2

youreds wrote:

I'll get on the phone to the Tax office for him tomorrow & get the ball rolling.

That's the best idea. But, be aware that they will refuse to talk to you without authority from your father. You might be lucky, and he may be able to give authority over the phone, but that won't alway be accepted, and will need to be done on every phone call.

Get your father to write and sign a letter to send to his tax office giving you authority to deal with all his tax affairs on his behalf. Will make life much easier.

It's hard to say if he will have over, or underpaid tax. He had tax deducted at source from interest, but also had the tax deducted through his code. Then there is the married couples allowance he received that he has been receiving the benefit of for the past few years. Be prepared for the possibility of a liability arising from previous years. However, no liability will be collected straight away. Will be collected through his next years tax code.

You will probably be sent a form P161 to fill in. This is a pension enquiry form, and it asks for everything they need to know. It would help them out if you wrote a letter to go with it when you return it giving detailed information so that everything is clear. Will help it get sorted out quicker.