Question
Is a Capital Gain classed as income for purposes of age allowance? And If I turn 65 half-way through the tax year, at what point do I qualify for the increased allowance i.e. at the beginning, end or pro-rata?Answer
Good news on both fronts. Capital gains are not classed as income so they don’t affect your age-related income tax allowance. Plus the increased allowance applies for the whole tax year in which you celebrate your 65th birthday. So, for example, even if you turn 65 on 5 April 2010 you’ll enjoy the higher allowance for the whole tax year running from 6 April 2009 to 5 April 2010. It’s always worth checking with your tax office before you reach 65 to ensure they know your date of birth, so that the additional allowance is applied correctly.
There’s a change affecting the seriously wealthy from 6 April this year. If you earn above £100,000 then your personal income tax allowance will reduce by £1 for every £2 of income above the £100,000 limit. This means that for a few people above 65, not only would they lose their additional age-related allowance, but the allowance could be wiped out entirely. Mind you, I doubt those earning over £100,000 in retirement are overly worried!
Is a Capital Gain classed as income for purposes of age allowance? And If I turn 65 half-way through the tax year, at what point do I qualify for the increased allowance i.e. at the beginning, end or pro-rata?Answer
Good news on both fronts. Capital gains are not classed as income so they don’t affect your age-related income tax allowance. Plus the increased allowance applies for the whole tax year in which you celebrate your 65th birthday. So, for example, even if you turn 65 on 5 April 2010 you’ll enjoy the higher allowance for the whole tax year running from 6 April 2009 to 5 April 2010. It’s always worth checking with your tax office before you reach 65 to ensure they know your date of birth, so that the additional allowance is applied correctly.
There’s a change affecting the seriously wealthy from 6 April this year. If you earn above £100,000 then your personal income tax allowance will reduce by £1 for every £2 of income above the £100,000 limit. This means that for a few people above 65, not only would they lose their additional age-related allowance, but the allowance could be wiped out entirely. Mind you, I doubt those earning over £100,000 in retirement are overly worried!
Read this Q and A at http://www.candidmoney.com/questions/question158.aspx
No comments:
Post a Comment