Do you have any advice on tax planning for the over-55s?
03 July 2024
Question by Boring Money Reader
Do you have any advice on tax planning for the over-55s? I get you’re allowed the first £12,500 each per married couple then another £1,000 each from savings (£500 for higher rate), but isn't there another £4,000 that you can receive without paying tax?
Answered by Samantha Secomb
The tax-free allowances for over 55 are the same as for everyone else. Allowances have been gradually reduced in the last few years and currently stand at the following:
- £12,570 a year income/earnings free from Income Tax
- £1,000 a year interest on savings free from Income Tax if you are a basic rate taxpayer, £500 if you are a higher rate taxpayer, and none if you are an additional rate taxpayer
- £500 a year of tax-free dividend income
- £3,000 a year Capital Gains Tax-free allowance
There is also the starting rate for savings allowance - this allowance is up to £5,000 a year tax-free interest from savings income. It only applies if you have minimal earnings/income from other sources above the tax-free income of £12,570 a year.
The £5,000 interest tax-free amount is pro-rated if your income is between £12,570 and £17,570. If your earnings/income is higher, it does not apply. A planner or an accountant could help you make the calculations and establish your entitlement if it applies to your circumstances.
