What income counts against Age Allowance?

It is income which is liable for tax. That is to say, pensions, dividends, interest, earnings, commission, fees, tips, rental income, and anything else which the HMRC considers to be taxable.

It excludes returns of capital (as from so-called bonds), income arising inside ISAs or PEPs, gifts, inheritances, but I'm not sure about capital gains, as if you have a CGT liability, the gain is added to your income to calculate the tax due.

In message , Terry Harper writes

Capital Gains are excluded.

Many thanks for the replies - much as I thought!

I have a supplementary question. My father-in-law has lived with us for about a year. He receives Age Allowance, and has pension income etc. *below* the 20,100 threashold. He is about to sell his house - and when the proceeds from this are invested, his total income will be *above* the threshold - but wouldn't be if he only received 50% of the investment income.

If he were to open a joint account with my wife, and put the house money into it, would the interest be treated for tax purposes as being split

In message , Roger Mills writes

What makes you think that? These days it is relatively easy and cheap to wrap the investment up so that no tax would be payable and the "income" would not be regarded as income for the purposes of the Age Allowance so long as the income did not exceed 5% per annum. See an IFA who is knowledgeable about offshore bonds and cash accounts (most aren't)

yes,

Not if it was a genuine gift.

The legal status between the parties is irrelevant.

I wouldnt advise him to do that though because (no disrespect intended), death, divorce, bankruptcy and intra family disputes could wreck the situation.

I put that point in because I'm not sure whether adding a capital gain to your income, in order to calculate the CGT due, affects the Age Allowance. Are you sure about that?

In message , Terry Harper writes

Yes. The rates of CGT arent the income tax rates, they are 20% and 40% and doesnt have any effect on the age allowance because it isnt income.

In message of Mon, 29 May 2006, Terry Harper writes

Capital Gains Tax is payable in Capital Gains. The rate of Capital Gains Tax is determined according to what rate you have paid Income Tax, but that's all. It is paid as one sum by 31st January and is not used in calculating payments on account for the following year (which is Income Tax), neither does it have any effect on Age Allowance which is an Income Tax Allowance.

David

According to the piece of paper I'm looking at, if you do not pay the full amount of tax at 10%, you will be charged CGT at that until the

In message , Terry Harper writes

yes, I forgot that one!