|
Last update : November 2011
|
Pensioners Often Pay Too Much Tax
So here's some advice
|
|
| A new report from the excellent Low Incomes Tax Reform Group (LITRG) has indicated that many pensioners are paying too much tax and missing benefits because of "inadequate" tax guidance.
The LITRG states the Inland Revenue is simply not doing enough to make sure pensioners complete tax form P161 (more information below). Pensioners need to fill out the P161 to make sure they don't miss better personal tax allowances.
|
| What is the P161 tax form |
- A P161 form tells the taxman about your age and income and should be filled out just before the state pension age
- The taxman needs the information to work out what tax-free allowances you're entitled to and how much tax (if any) you should be paying when you start receiving your pension income
- Failure to fill out the form can in certain circumstances mean that pensioners miss the higher personal allowances the elderly are entitled to
- These tax allowances for the 2009-10 tax year are £9,490 for those aged 65-74 and £9,640 for the over 75s
- Note the allowances are far better than the standard personal allowance which is currently £6,640 for non-pensioners
|
| How to check your tax code |
- Pensioners should check to ensure they are receiving the right personal allowance through their personal tax code
- If for example a person is receiving the basic personal allowance their tax code will have the letter L in it
- But if aged between 65-74 the tax-code will have a letter P in it
- Full details of personal allowances and tax codes are available from the Inland Revenue website, listed below
|
|
|
|
Interested in THE BEST
Personal Finance Deals?
|
|
|
|
|
|
Last Updated: 30th January 2012
|
|
|
Instant Access savings at 2.90% (remember, base rates are still only 0.5%) - More |
|
|
|
Borrow money (or better manage your cashflow) at just 2.99% over 20 months - More |
|
|
|
Earn 1.25% CashBack on all purchases with this great American Express card (no application fee) - More |
|
|
|
Earn 2.75% tax-free (fixed for 18 months) with this Cash ISA deal - More |
|
|
|
Want excellent customer support from your Bank + get £100 for switching your account (the dirty work is done for you) - More |
|
|
|
|
| How to get your P161 form |
- The P161 form is computer-generated and sent by the Inland Revenue
- However, it is only issued if the Revenue receives notification by the Department for Work and Pensions that the person is question is due to reach state pension age
- Note, if you're self-employed it won't be sent out automatically, you have to request it yourself and then send it back
- If you haven't received your form you can download a copy from this link or call your local tax office
|
| Summary |
| Being on the right tax code is of critical importance to pensioners because it means increased tax allowances. The good news is that if you're on the wrong code it's easy to let the taxman know of the problem. Just fill out the P161 form as mentioned above and send it back. |
| See also |
|
|
|
|
|
|
