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Author: Age Scotland
Published on 19 April 2012 03:00 PM

Following the Chancellors’ announcement last month to phase out age related tax allowances older people have been going online in their tens of thousands to demonstrate their unhappiness with the proposal.

Currently in the year that someone reaches 65 they get a higher personal tax allowance and in the year they reach 75 the allowance increases again. For tax year 2012-13 the personal allowances are:

  • Under 65 - £8,105
  • 65-74 - £10,500 
  • 75+ - £10,660

The higher age allowances are subject to an income limit. If your income is above £25,400 in 2012-13 the allowance is gradually reduced (by £1 for every £2 above the limit) until it reaches the level of the standard allowance. All the personal allowances are reduced if people have incomes over £100,000.

The Chancellor announced that the age allowances will be phased out, starting from next year, meaning there will eventually be one level of personal allowance for everyone. Existing age-related allowances will be frozen at the 2012-13 level from April 2013. So if someone is receiving the higher allowance, this will stay at the current level until the standard allowance catches up. People turning 65 after 5 April 2013 will only get the standard personal allowance amount. The standard personal allowance is being increased to £9,205 in 2013-14 and the Government is committed to raise this to £10,000 in the future.

The change will affect people aged 65 and over with incomes over £9,205 and less than around £28,000 in 2013-14. It will not affect those whose income is too low to pay tax – about half of pensioners – or those with higher incomes who do not get the age allowance. An HMRC note states that around 4.4 million people aged 65 and over will be worse off than they would have been had the current system continued – losing an average of £83 in 2013-14. Of these, 360,000 individuals will lose an average of £285 because they will no longer be able to claim the higher allowance on reaching 65. 230,000 people will be brought into income tax

However older people across the country are protesting against the changes. A petition lodged by Arthur Streatfield by gained in excess of 62,000 signatures and if a petition gets at least 100,000 signatures, it will be eligible for debate in the House of Commons. The link below will take you to the epetitions site where you can demonstrate your opposition to the Government’s proposals http://epetitions.direct.gov.uk/petitions/31778.  

 

For more information: Call the Age Scotland helpline: 0800 12 44 222