From Council Tax to National Insurance: tax breaks for the over-55s

How older households can reduce their tax bill.

Check your tax code

It's important that you check you're paying the right amount of tax in the first place.

If you're still working, you'll be on an 'L' code. This means you're under 65 and eligible for the basic personal allowance (£11,000).

Otherwise, you'll need to state what your main source of income is. All other income will be taxed without any alowance.

Basic rate taxpayers will be given a BR code for additional sources of income, higher-rate will get D0 and additional rate will get a D1 code. An NT code means no tax will be taken.

M and N means you have received or given 10% of your personal allowance to your spouse through the Marriage Allowance.

For more information, have a read of How to check you're on the right tax code 2016/17.

Stop paying National Insurance Contributions

If you work beyond your retirement age you don’t have to carry on making National Insurance Class 1 and 2 contributions.

You can stop these being taken from your wages by showing proof of age to your employer or writing to HMRC to get a letter confirming that you’ve reached State Pension age.

Married Couple's Allowance

If you’re married and either you or your spouse was born before April 6 1935, you could get up to a 10% reduction on the total amount of your tax bill with the Married Couple's Allowance.

Between £322 and £835.50 will be slashed off your bill. Couples married after 2005 will have the allowance allocated to the highest earner but it may automatically apply to the husband if you married before then. 

Tax perks for older Brits

Marriage Allowance for younger couples

The Marriage Allowance lets you transfer £1,100 of your Personal Allowance to your husband, wife or civil partner if they earn more than you. This can reduce their tax by up to £220 in a tax year. This is most beneficial to you as the lower earner if you have an income of £11,000 or less.

You can’t claim both the Married Couple’s Allowance and the Marriage Allowance, but you’ll be better off with the Married Couple’s Allowance if you were born before April 6, 1935.

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Slash your Council Tax

If you're a pensioner, the Government says you should still be getting the same level of Council Tax Reduction as if you were getting Council Tax Benefit.

So if your income is less than the Government says you need to live on you'll get the Maximum Council Tax Reduction.

However, if you get the Guarantee Credit part of Pension Credit, your income and capital are ignored and you’ll get full Council Tax Reduction.

All pensioners must also be allowed to apply for a second adult rebate under their Council Tax Reduction scheme so make sure you do.

You're entitled to this if you have a second adult living with you. However, they can't be your partner and their income must be low enough or they must be on certain benefits.

The amount your Council Tax is reduced by will depend on the second person's income.

Attendance Allowance

Though it’s not tax relief in itself, you can get extra Council Tax Reduction if you get Attendance Allowance.

It’s available to those who have a physical or mental disability (or both) or your disability is severe enough for you to need help caring for yourself or someone to supervise you, for your own or someone else’s safety.

Pay less VAT on mobility aids

Certain mobility aids can be installed in a private home (or a shared with friends and relations) of someone aged 60+ at a reduced rate of 5%. The items must be supplied and installed together. It covers:

  • Grab rails
  • Ramps
  • Stair lifts
  • Bath lifts
  • Built-in shower seats or showers containing built-in shower seats
  • Walk-in baths with sealable doors

The person who uses the goods must be over 60 when the purchase and installation takes place. However, it doesn’t matter who orders and pays for the work.

There are loads of other ways you can cut your tax bill which aren't dependent on age.

Read more at Pay less tax: cut your Income Tax, Capital Gains Tax, Inheritance Tax bill.

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