over 75

Personal allowance correction for over 65s

by Admin

In response to a comment from a visitor to The Salary Calculator site, I have updated the calculation of personal allowances for the over-65s. As you can see on this page on the HMRC website, personal allowances (the amount you can earn before paying any income tax) increase when you are over 65. The Salary Calculator has always reflected this, but there is also a note on the HMRC explaining that if you are over 65 and earn over the “Income Limit”, your personal allowance is decreased gradually, until it reaches the under-65 value.

The Salary Calculator has been updated to reflect this additional complexity. To quote the HMRC article:

If your income is over the income limit, we reduce the age-related allowance by half of the amount – £1 for every £2 – you have over that limit, until the basic rate allowance is reached. You’ll always get the basic allowance, whatever the level of your income.

So if, for example, you’re 66 and have an income of £23,400 – £500 over the limit – we would reduce your age-related Personal Allowance by £250 to £9,240.

These values reflect the April 2009 personal allowance values – needless to say, The Salary Calculator will be updated with the April 2010 values early in next year.

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None of the content on this website, including blog posts, comments, or responses to user comments, is offered as financial advice. Figures used are for illustrative purposes only.

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