Except from tax on savings?

It all depends on her age. See here...

From your figures, the 10% band will cover all the excess.

Winter FA is not taxable.

Her exact taxable income will depend on how much State Pension she receives in the tax year - not always exactly 52 weeks worth...

HTH

You don't say how old mother is; that's important.

If she is over 65, her personal allowance for the tax year 2006-7 would be £7280 so therefore she would pay no tax and her savings interest could be paid gross.

If she is under 65, her allowance will be £5035 which gives her £1200 odd of taxable income so her savings would also be taxable. However, as her taxable income is less than £2090 she would only be taxed at the 10% rate.

The Pensioners Christmas Bonus and Winter Fuel Allowance are both non taxable.

Hope this is of help.

Peter

Posting from Peter Rogers

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Martin writes

Isn't there a case for her having an Instant Access ISA? My g/f has all her savings in an ISA, and keeps below the tax threshold.

Very nicely explained. Can I just change the topic slightly? Is your mother getting all the benefits to which she is entitled? If she has rent/council tax liabilities and lives alone she should receive full CTB/HB. If she is over 65 then she is probably eligible for some element of Pension Credit. A visit to your local CAB for a benefit check might be worth her while.

She gets full HB, but must pay a contribution to her CT of about 55 a year. She recently got diagnosed with early onset dementia, so once we've got her GP to fill in the letter to the local authority, she'll not have to pay anything at all. She doesn't receive any other state benefits.

She should apply for Disability Living Allowance or Attendance Allowance if over 65. Apply for Pension Credit, it costs nothing to do so.

She's 63. Her income is just over the threshold by about 2 a week, so can't claim Pension Credit and once they've taken the money off her for her contribution to her CT then she is still 1 a week better off. It seems they may give you the money in one hand but are quicker to grab the money back off you from the other. It seems my mother is just a mule for transferring money between individual government departments.

Oh well, at least she's still just under 1 a week better off.

I don't believe that you can claim Pension Credit until 65. If she were 65 now I think she would get £15 p.w. Savings Credit. If she has been diagnosed with dementia then I urge you to visit your local CAB to discuss DLA. Even the lower rate care component is worth £16.50 p.w. and will not affect her HB/CTB - it is not counted as income for those benefits.

She could get Pension Credit from aged 60 if her income was below what used to be called the Minimum Income Guarantee. I think she might get it when she gets to 65 because of her "savings" in the form of her occupational pension and small cash savings which I stated from my opening post.

I will check out with the CAB about DLA - thanks for the information.