Have you made sure that you are getting the correct Tax Allowance which is available to all over age 65?
It should be automatic that the Tax System adjusts your Taxable Free Pay Allowance. This is the amount that you are able to earn before you start paying income tax.
For the tax year 2009/2010 (April 5th) the basic personal tax allowance for those under 65yrs is £6,475 BUT if you are ......
There is a limit of course! If your total income is below £22,900, then you will get the age related tax allowance as set out above. If your income is MORE than £22,900, then there is a different scale of allowances.
If your income is below £22,900 for the tax year 2009-2010 (ending April 5th 2010) your personal tax allowance will increase when you're 65 and also when you reach 75.
If your (Taxable) income is more than £22,900 pa for the Tax year ending April 5th 2010 then >>>>
You will not get the full age-related tax allowance BUT you will get some of it!
The age-related tax allowance will be calculated like this. Basically, for every £2 you are over the £22,900 earnings limit, you will lose £1 from the allowance. That does NOT mean that you pay extra tax at half your additional income. IE You do not pay £1 extra in tax for every extra £2 you earn.
What does this mean for you in Tax you will Pay? OK - Here goes!!! (For those between ages 65 and 75. At 75 you get a slightly enhanced allowance - £9,640 instead of £9,490)
This table is for those between ages of 65 and 75....
|Taxable Income.||Basic Allowance||Less Allowance Reduction||Your Allowance is...||Taxed Income||Tax to pay - 20%||You are left with|
|30,000||9490||3,550||6,745 ****||23,255 ***||4,561||25,439 ***|
Yes! We know that the figure for the Allowance on £30,000 seems wrong, BUT it is the basic allowance for a single person that EVERYONE gets - regardless of income!
If your income is above £30,000 then you probably have an accountant. If not, then we suggest that you should have!