News1 min ago
Tax rebate
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I am over retirement age but still work, I intend to give up in June as its my birth month, but I have heard if you give up before the end of the tax year 4th April then you are entitled to a rebate for that year back to the previous April, is this true ?
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No that is not true. Yet another urban myth.
However if you give up work during a tax year, you will be entitled to a small rebate because the PAYE tax system deducts tax weekly (or monthly, depending on how frequently you are paid) based on an assumption you get an equal proportion of your personal tax allowance per week (or month), then pay tax on the balance of your income.
If you then give up before the end of the tax year the calculation is not correct and the tax office will rebate you a proportion.
However if you give up work during a tax year, you will be entitled to a small rebate because the PAYE tax system deducts tax weekly (or monthly, depending on how frequently you are paid) based on an assumption you get an equal proportion of your personal tax allowance per week (or month), then pay tax on the balance of your income.
If you then give up before the end of the tax year the calculation is not correct and the tax office will rebate you a proportion.
That of course would depend on future income bm.
It is granted unlikely but actually possible in some cases that pensions previously deferred would result in a greater income than was previously being earned. If that actually manged to get the taxpayer up into the 40% band there would actually be a further bill to pay!
It's far more likely that a pension will prove equally taxable as the source of income just given up and that no rebate will be due either. Depends on the tax code in use, the future pension income and the earnings to date.
It is granted unlikely but actually possible in some cases that pensions previously deferred would result in a greater income than was previously being earned. If that actually manged to get the taxpayer up into the 40% band there would actually be a further bill to pay!
It's far more likely that a pension will prove equally taxable as the source of income just given up and that no rebate will be due either. Depends on the tax code in use, the future pension income and the earnings to date.
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