Pensioner 75 – SELF EMPLOYED

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  • #31966
    Anonymous
    Guest

    Hello

    We have a pensioner claim whom is self employed.
    He is stating that when calculating his self employed income the following should be considered
    : his personal tax allowance of 9640
    : Less his total state pension of 4123
    : making his allowance £5517

    Is this correct I cant see in the guidance that we follow this from a benefits perspective – but can say in all honesty I have never assessed someones self employed income that is aged over 75 – ?

    Thank you 😳

    #89390
    Kevin D
    Participant

    HB(PC)R 40(1) applies. In short, it’s the normal personal allowance that applies.

    #89391
    Anonymous
    Guest

    Thank you Kevin,

    What is confusing me ( which is not difficult ) is the fact that 40.(1) states –
    …. ” the basic rate of tax applicable to the assessment perdiod less only the personal relief to which the claimant is entitled under sections 251(1) of the Income and Coporation Taxes Act 1988 (personal allowance) as is appropriate to his circumstances”

    So does his circumstances – being 75 not mean that the claimant is entitled to the personal relief of 9640 – as apposed to a normal persons?

    #89392
    Kevin D
    Participant

    http://www.legislation.gov.uk/ukpga/1988/1/section/257/enacted

    Peter Barker and myself have analysed the wording of s.257 and agree that it is a touch ambiguous (at least to our non-lawyer minds). However, on balance (just), we decided that only the allowance stated in subsection 1 of s.257 has effect. Assuming Peter and myself are correct, that means the bog standard normal personal allowance, irrespective of the claimant’s actual age.

    It’s worth bearing in mind that the higher the personal allowance, the higher the amount of income is taken into account, hence lower HB/CTB. On that basis, a clmt would have to be insane (or stupid) to ask for a HIGHER personal allowance to be taken into account. If the clmt insists the allowance should be LOWER, he runs the risk of the FtT deciding the full modified personal allowance applies (i.e. disagreeing with the interpretation made by Peter and myself).

    Ultimately, the interpretation of s.257 is for your LA to decide. I would accept the analysis by Peter and myself is at least open to argument, but the ambiguity does help us to feel comfortable(ish) that our conclusions can properly be reached.

    #42396
    Anonymous
    Guest

    Sorry – But im still lost – the regs states to refer to section 257(1) only :-

    257 (1) “Personal relief(1)Subject to the provisions of this section and section 261, the claimant shall be entitled—
    (a)if he proves—
    (i)that for the year of assessment he has his wife living with him, or
    (ii)that his wife is wholly maintained by him during the year of assessment, and that he is not entitled in computing the amount of his income for that year for income tax purposes to make any deduction in respect of the sums paid for the maintenance of his wife,
    to a deduction of £3,795 from his total income;
    (b)in any other case, to a deduction of £2,425 from his total income.”

    So in this clmts case – £2425 – Which still isnt the normal persons allowance of 6475.00
    Im a missing something? do we then need to add something on – do I need to keep reading down 257 – and not just section (1) ?

    Please come back to me gently im sure there is something glaringly obviously! 😳 ha!

    #89393
    Kevin D
    Participant

    [quote:d641c53036=”swan08″]So in this clmts case – £2425 – Which still isnt the normal persons allowance of 6475.00
    Im a missing something? do we then need to add something on – do I need to keep reading down 257 – and not just section (1) ?

    Please come back to me gently im sure there is something glaringly obviously! 😳 ha![/quote:d641c53036]

    The version of the legislation on the link is the original version – that includes the personal allowance rate at that time. It’s a bit like HB/CTB legislation; applicable amounts and non-dep deductions change, but the legislation itself (usually) remains unaffected. So, if you mentally substitute the £6,475 for £2,425, you’ll be there or thereabouts.

    Even more confusingly, the ICTA 1988 has itself effectively been replaced. But the Interpretation Act means you follow the reference to ICTA in the context of the replacement legislation.

    #89394
    Anonymous
    Guest

    Thank you Kevin,

    I did consider that , but went for the more likely option that I was missing something, Now it makes “PERFECT” 🙂 sense, and I agree with you and peter 🙂

    Thanks for you help

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