New tax allowance

exil

Assuming you are not working, and thus don't qualify for tax credit,
then the max. you will lose is £202 if your taxable earnings are £7455, dropping to zero at just over £16,000.

If you are working, NI changes give you an extra £28 a year or so. Also, working will mean that tax credit increases will cancel out the tax increases and might leave you a lot better off depending on hours worked, whether you're single, or whether you have kids.

paris12

what is the amount you can earn once reaching retirment age before paying tax

jem16

It depends on your age.

http://www.hmrc.gov.uk/rates/it.htm

jennifernil

Thanks for pointing that out Trying to be good, I had forgotten that.
So will my pension first use part of my personal allowance, the interest the rest, then anything over will be taxed at 10% up to a certain point? Or will the interest be set against my allowance first, then my pension, so anything over is pension and so taxed at 20%.

If the income to be taxed is the savings at 10%, what is the amount in the 10% band next year?

spanishfly15

chesky369 wrote: »

I was 64 in January - I THINK this means that I will have an 'over 65' personal allowance for the whole of the 2008/09 financial year as I shall be 65 before April 09 - can anyone confirm this?

yes but usually this isn't given in your tax code until you reach your 65th birthday. the reason being that sometimes the state retirement pension is not awarded until the 65th birthday as as such the additional allowances help to 'soften the blow' of extra tax due on the state pension.

HMRC should send you a P161 Pension Enquiry form to complete as your birthday approaches. in many cases the age related allowance is not given until this form is returned as you are asked to declare all your sources of income in this form and in some cases the total income can be so high that the age relates allowance are actual reduced to the basic personal allowance.

just a further point that some people may not be aware of but if a person has reduced age related personal allowances then they will also be required to complete a self-assessment tax return form.