NEWS
Guide to Tax for Pensioners
The Chancellor announced his Emergency Budget proposals on the 22 June 2010. The following items will be of particular interest to pensioners Note. The government has said that it intends to use the Consumer Prices Index [CPI] for price indexation of benefits. The CPI increase is usually less than the Retail Prices Index [RPI]
Value Added Tax will rise from 17.5% to 20% on the 04 January 2011
The Standard Rate of Insurance Premium Tax will rise from 5% to 6% on 04 January 2011. The Higher rate will rise from 17.5% to 20%
From 11 April 2011, the Basic State Retirement Pension will rise by the higher of the increase in earnings, the increase in prices or 2.5%. In 2011 the price increase will be measured using the RPI but in subsequent years it will be measured using the CPI. The current rates are £97.65 per week for a single person and £156.15 per week for a couple
From 11 April 2011 Additional Pensions will increase in line with CPI
There has been no announcement about the age addition for the over 80’s, so we assume that it will remain at 25 pence per week
From 11 April 2011, the Pension Credit Guarantee will increase from £132.60 per week for a single pensioner and from £202.40 per week for a couple “by the cash rise in a full state pension” There has been no announcement about the capital disregard, which is currently £98.40 for a single pensioner and £157.25 for a couple
The Government has said that it will “protect” the Winter Fuel Payment. However, we have good reasonto believe that the Government intends to revert from £250 to £200 for households with someone at or over the female State Pension Age and from £400 to £300 for households with someone aged 80 or over . Some “protection” !!!
There has been no announcement about the Christmas Bonus, so we assume that it will remain at £10
From 06 April 2011 the basic personal allowance for Income Tax will rise from £6,475
to £7,475. The personal allowance for someone aged 65 to 74 will remain at £9,490
and for someone aged 75 or more at £9,640. The maximum income a pensioner can have
and still get the age-
Nothing has yet been said about the married couple’s allowance [ for those aged 75
and over], which is currently £6,965. The married couple’s allowance is currently
subject to the £22,900 income limit for age-
Nothing has yet been said about the blind person’s allowance, which is currently £1,890 but we would expect to rise in line with CPI.
From 11 April 2011, Disability benefits are expected to rise in line with the CPI
The 10% starting rate of Income Tax for savings is expected to apply to income between
£0 and £ 2.440. If an individual’s taxable non-
The Inheritance Tax allowance will remain at £325,000 for individuals and at £650,000 for married couples and civil partners until 2014/15
It is expected that the ISA annual investment limit will rise, in line with CPI, from the current overall limit of £10,200, and cash limit of £5,100
The standard rate of Capital Gains Tax will remain at 18% but from 23 June 2010 there will be a new higher rate of 28%. The higher rate will be applicable to higher rate taxpayers. Disposable before 23 June 2010 will remain liable to the 18% standard rate.
The proposed Landline Duty will be scrapped
For those still in employment, from 06 April 2011 the Employee National Insurance standard rate contributions will rise from 11% to 12% and the higher earnings rate will rise from 1% to 2%
The Government will work in partnership with local authorities in England to implement
a Council Tax freeze in 2011-
So, not much good news there then!!!