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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15915
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My dad was born in 1933, my mum was born in 1944, they

Customer Question

Hi
My dad was born in 1933, my mum was born in 1944, they have been married 50+ years.
They receive the state pension, interest on bank savings, money invested in stock market, a small private pension and rent out a property for approx. £1000 per month less expenses. They live in an owned property, therefore they have 2 properties in total (no mortgages), one of which is rented out.
What is their combined personal tax allowance?
Are there special rules on the sources of income stated above? My dad thinks some of the private pension is tax free (£3000 per annum allowed?)
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. Take a look here for personal allowances for the 2016/17 tax year. Each of your parents is entitled to a personal allowance of £11,000 for 2016/17. That means the first £11,000 of their respective incomes should not be taxed. As your father was born before 6 April 1935, he will be entitled to the married couiples' allowance which could reduce his tax by as much as £835.50 per annum (£8,355 @ 10%) but no less than £322.00 per annum (£3,220 @ 10%). If one of your parents has insufficient income to use all their personal allowance, they can transfer up to 10% of it to their spouse so long as the receiving spouse is not a 40% taxpayer. Read about that here. As the rental income is paid without deduction of tax at source it should be reported to HMRC in self-assessment tax returns along with their other income details. I'm not sure where your father has got the £3,000 figure from. I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.
Thanks.
The rental property is in joint names - do my parents fill in a joint SA Tax Return or do they do one each?
Expert:  TonyTax replied 1 year ago.
They should complete individual tax returns so the rental income should be split on a 50:50 basis unless it is actually owned in proportions other than 50:50 and HMRC are notified on a form 17.

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