Over 65's pay tax on Bonds?

LCK73

Hi

Should my retired mother (65) be paying tax on the interest accrued from a bond? Thanks.

jem16

If her taxable income is over her personal allowance then yes. Paying tax is nothing to do with age and all about how much income you have.

martinman3

Please note that personal allowances rise quite dramatically for over 65s for the current tax year 2008-2009.
Your mother would now have an initial personal allowance of £9030
see http://www.hmrc.gov.uk/rates/it.htm
also 10% savings income rate may apply.

This makes it more likely that the bond interest could be paid gross. The way to find out is to look at her Tax Coding Notice Form P2 which will state her tax-free allowance remaining after the state pension is paid.

p.s. HMRC does not always get Tax Coding correct and women are meant to contact them when reaching the age of 65.
http://www.hmrc.gov.uk/pensioners/approaching.htm