Frequently Asked Questions (FAQ):

Tax

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Do I have to pay tax now I am over 65?

When you are over 65 you will still have to pay tax on your income, but your tax free allowance is higher than before you were 65.  Your taxable income includes your occupational pension or personal pension if you have one.  Some social security benefits are also taxable, for example, your retirement pension.  You may also have income in the form of interest from savings or shares, from rental on any property you own or earnings from any work that you are doing.

If your only taxable income is basic rate state retirement pension (excluding graduated or additional pension) you will not pay any tax.  This is because your tax free allowance will be more than the basic pension.  If you are working, either full or part time, your earnings will be taxed under the PAYE system.  Any tax due on your other taxable income, for example your state retirement pension will be deducted from your earnings under the PAYE system.

You may be sent a self assessment tax return form.  If you are not sent a form and you have income which is taxable, it is your responsibility to ask your local tax office to send you a form.

If you have investments, you need to check whether the tax is deducted before you get the income.  If your income is low you may be able to claim back the tax that has been paid on your investments, income from some investments is paid gross, that is, without tax having been deducted.  The interest on income bonds, for example is paid in this way.  You need to enter this on your tax return form and follow for tax collection by self assessment.  If you have a drop in income when you retire, you may be entitled to a tax rebate.