Personal allowances and benefits for the elderly

If you are an elderly taxpayer on a low income and your taxable income falls below your personal allowance, you may be able to claim a repayment if:

• you have had tax deducted at source from your income (e.g. bank/building society interest etc), and
• part of your taxed income falls within the personal allowance available to you for the tax year.

You could also be entitled to the age allowance and higher married couples allowance, which increases your personal allowances, if you are over 65 years old at 5 April 2000.

Income tax allowances

The following table shows how much income you can earn that is exempt from income tax.

Notes

*1 The married couple's allowance is only available to couples where one or both partners was born before 6 April 1935.
*2 Relief is restricted to 10%.

Benefits for the elderly

You may be entitled to:

• A retirement pension
  You must have reached state pension age (men: 65, women: 60) and have paid enough NI contributions. A widowed person may be able to claim on the record of a spouse or deceased spouse. The pension consists of a basic amount and increases based on age, dependants, and spouse's contributions. Pension income is taxable in the UK.
• Over 80's pension (category D)
  You must be over 80, been a UK resident for at least 20 years after the age of 60, and not receiving a retirement pension or other social security benefits above the rate of the non-contributory pension.
• Income support
  You must be aged 60 or over. If you are residing in a care or nursing home, your savings cannot exceed £8,000. If you are not residing in a care or nursing home, your savings cannot exceed £16,000. Savings include: cash, bank accounts, national savings, premium bonds, shares, and land and property (not including main home).
• Housing benefit
  You must occupy the dwelling as your home, be liable to pay rent, and be entitled to income support, the jobseeker's allowance, or have a low income.
• Council tax benefit
  You must be liable to pay council tax on property in which you are resident, have a low income, and not have savings exceeding £16,000.
• Christmas bonus
  You must be present or ordinarily resident in the UK and be entitled to a retirement pension or income support. The bonus is not taxable.
• Attendance allowance
  You must be disabled after age 65 (or not claiming until after your 65th birthday) and need daily help during the last 6 months or use a kidney machine at home or in a self care unit twice or more per week. The income is not taxable.

For more information about any of these benefits, refer to the Benefits Agency Web site. Various leaflets covering elderly issues are also available from the DSS.

HM Revenue & Customs also have a number of publications available covering certain aspects of the tax regime and how it affects the elderly:

• Income Tax and Pensioners (Leaflet IR121): a leaflet that does not cover all the issues that a pensioner would want and those that are covered lack depth. The figures are out of date.
• A Guide for People with Savings (Leaflet IR110): a very important topic for the pensioner.
• Income Tax and Incapacity Benefit (Leaflet IR144): an out of date leaflet which still explains the principles.

This page was last reviewed on 16 April 2007.
The information may not reflect changes in legislation made after this date.

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