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Tax-AGE ALLOWANCES-Granny tax-Budget for 2013/14 (Read 11281 times)
WG
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Tax-AGE ALLOWANCES-Granny tax-Budget for 2013/14
Mar 22nd, 2012, 11:44am
 
Like many-I suspect I will have to consult my accountant on this, rather than try to analyse post budget media reports/interviews re "pensioners rip off" etc.

My  understanding has always been that the over 65 age allowance reduces where somebody's  income is over the limit (currently 24,500 for 2013/4). This reduction is one pound for every two pounds over that limit.

My other understanding is that the age allowance(10,500) for those at 65 and over in april 2013 will be frozen next year and not reduced.

The key question that each and every media report has so far missed is what will happen when the new general tax allowance catches up with the old age allowance? In other words will pensioners at that point continue to have their actual income tax relief reduced by the one pound for every two pounds ABOVE the existing 24,500 limit?

As always the real devil will be in the detail. Watch this space.


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JohnW
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Re: Tax-AGE ALLOWANCES-Granny tax-Budget for 2013/14
Reply #1 - Mar 23rd, 2012, 10:16am
 
FoxyFace,

I have this reply for you from Paul Lewis (Presenter of MoneyBox on R4) when I ran your question by him. [I know/knew him quite well enough to do such things!]


"The purpose of the taper on incomes above a certain level is to reduce the age allowance to the normal personal allowance. So when there is no higher age allowance there will be no taper.

The level of where the taper starts in 13/14 for those with the residual age allowance has not been announced yet."

I hope this helps with your query.
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John-Westbury  
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Re: Tax-AGE ALLOWANCES-Granny tax-Budget for 2013/14
Reply #2 - Mar 23rd, 2012, 6:07pm
 
Thanks JohnW and Paul Lewis!
It's amazing the Chancellor did not use clear wording of this kind to explain his intentions. Well done Paul Lewis.
In summary-I deduce that many(most) BBC pensioners in receipt of a BBC pension and a state pension will certainly NOT have their personal age allowances reduced below the new and rising national basic personal allowances.
The Government are right that there will be no cash loss-but they have made a pig's ear in explaining themselves, which is why they are now taking a significant barrage of well deserved flack
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