Who will be affected by the ‘Granny Tax’?

I’m worried about the Granny tax. Is this going to affect me? I’m aged 64 with an annual income of around £16,000.

 

The so-called Granny tax is actually a change in entitlement to allowances from 6 April 2013. You are currently entitled to a personal allowance (tax-free amount) to set against your income, of £8,105. From 6 April 2013 you will be entitled to a personal allowance of £9,205.

As you will reach age 65 in 2013/14 you may have expected to receive the higher age allowance of £10,500 which is available to people currently aged 65 or over. However, because the rules are changing on 6 April 2013, only those born before 6 April 1948 will be entitled to the age allowance of £10,500, everyone else will get the normal personal allowance. This is not as unfair as it seems as the age allowance will be frozen, probably for ever more at £10,500, but the personal allowance will increase each year, and is likely to reach £10,000 in 2014/15.

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