Income Tax on Pension

[Mr-H]

Because my combined State and Work Pensions (total £24700) are above the cutoff figure of £24000, I pay the equivalent of 50% tax rate on the balance of £700. Instead of paying tax on that £700 at 20% (£140) I pay £350. I just wondered if there was any way of offsetting some of my tax liabilities to my wife, who has not worked since the birth of our first child almost 40 years ago, and who gets only £60 per week (£3000+ per year) State Pension.

[bednobs]

no

[GetOverIt]

Surely...

Basic tax rate 20% on annual earnings above the PAYE tax threshold and up to £34,370
Higher tax rate 40% on annual earnings from £34,371 to £150,000


Or am I missing something, are the rules different for pensioners?

[GetOverIt]

Oh... so it is!

http://www.hmrc.gov.u...ax/personal-allow.htm

I must look into this, I'm looking to retire in a few years time!

[sunny-dave]

You don't pay tax at 50% on the extra £700 pounds - the age allowance is reduced by 50% which means you pay tax on £350 at 20% which is actually £70.

[GetOverIt]

sunny dave is right

24700-9590 x 20%= 3022

reduced by 250

24700 -9940 x 20% = 2952

difference 70