Pension Tax

edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning
4 replies 638 views
MelmarMelmar Forumite
36 Posts
Hi


My parents who are in their 80's are thinking of starting a cash ISA. However they are concerned that interest from the ISA will mean that they have to much in the way of savings, pushing them above a threshold which would mean that they have to pay tax on their pension. I cant find what this threshold may be also I thought income from an ISA would be tax free.


cheers for the help

Replies

  • LokoloLokolo Forumite
    20.9K Posts
    Part of the Furniture 10,000 Posts
    ✭✭✭✭✭
    Income is general taxable. So working income, pension income and savings income are the most widely used types of income that is taxable. ISA income is not taxable and therefore will not count towards total taxable income.

    The capital itself (the amount you have in savings) can be used to reduce benefits though.

    You can have hundreds of thousands of pounds and not pay any income tax, if its all in a 0% account, not earning interest!
  • MelmarMelmar Forumite
    36 Posts
    Hi


    So would I be correct in thinking, it is income alone that would mean a pensioner would pay tax and not the amount of savings that pensioner has?


    cheers
  • LokoloLokolo Forumite
    20.9K Posts
    Part of the Furniture 10,000 Posts
    ✭✭✭✭✭
    Income tax yes. That is taxable income though, of which ISA income isn't (normal savings accounts is taxable though!)

    The amount of savings would go towards the estate (savings, property etc.) when they pass away, which could mean inheritence tax, but the allowance for that is £325k per person.
  • SystemSystem Forumite
    177.9K Posts
    10,000 Posts Name Dropper
    ✭✭✭✭✭✭
    Lokolo wrote: »

    You can have hundreds of thousands of pounds and not pay any income tax, if its all in a 0% account, not earning interest!


    Or in Premium Bonds
This discussion has been closed.
LATEST NEWS AND GUIDES

Balance transfer credit cards

Shift existing card debt to 0% interest for up to 31 months

MSE Guides