Thursday, 22 March 2012

Pensioner tax - the details

Tax change for pensioners

Special pensioners' tax-free allowance frozen at £10,500 (£10,660 for 75s and over) if you're on it before the end of the 2012-13 tax year, abolished if you turn 65 from 6th April next year.

4.41m pensioners lose out in first year, losing £83 on average - compared with what they would have expected if the system had carried on as normal.

360,000 turning 65 next year will lose £285 on average and up to £322 over the year.

230,000 pensioners will be drawn into tax - they'll have to pay it on the new £9,205 personal allowance, but wouldn't have had to pay tax if they'd qualified for the age related allowance.

40% of pensioners lose out.
50% don't pay tax so aren't affected.
10% aren't affected because their incomes are too high (because the age related allowance was removed above £29,110).

These figures are from HMRC and the Treasury.

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