chocki Posted February 1, 2012 Share Posted February 1, 2012 Probably a very strange request but has anyone any idea which part of the year is best to retire to be able to claim tax back. My friend is ready for retiring but has been told if you retire at a certain period in the year, you can claim some tax back. Hope this makes sense Link to comment Share on other sites More sharing options...
shirleyF Posted February 2, 2012 Share Posted February 2, 2012 Ask the tax man. Link to comment Share on other sites More sharing options...
Rupert_Baehr Posted February 2, 2012 Share Posted February 2, 2012 It depends on how much you earn, your pre-retirement tax bracket and the tax bracket you will be in after you retire. Notwithstanding that any part of the year is a good time to retire - provided you can afford to live on your pension. Link to comment Share on other sites More sharing options...
brianthedog Posted February 2, 2012 Share Posted February 2, 2012 Probably a very strange request but has anyone any idea which part of the year is best to retire to be able to claim tax back. My friend is ready for retiring but has been told if you retire at a certain period in the year, you can claim some tax back. Hope this makes sense The nearer to the start of April the more they can claim. But this is only claiming overpaid tax as your friend will have worked less than an entire tax year. It's not worth adjusting the retirement date over. Link to comment Share on other sites More sharing options...
Rupert_Baehr Posted February 2, 2012 Share Posted February 2, 2012 The nearer to the start of April the more they can claim. But this is only claiming overpaid tax as your friend will have worked less than an entire tax year. It's not worth adjusting the retirement date over. (I'll make up figures here - to keep the sums simple.) Assume your tax allowance is £10,000 (made-up figure) Assume the lower rate of tax is 25% and is payable on the first £50,000 of taxable income. Assume the next rate of tax is 50%. If your current salary (before you retire) is £110,000pa then you pay No tax on the first £10k.................£0 25% tax on the next £50k..............£12,500 50% tax on the next £50k..............£25,000 Total tax.....................................£37,500 If - when you retire - you expect to have an annual income of £20k, then your tax on that income will be 25% of £10k Tax on your pension .....................£2,500 In that year (as in previous years) you could earn £50k taxable (£60k total) before you start paying higher rate tax. You've already got a taxable pension income of £10k, so if you work until you have earned an additional £40k, you will have reached (but not exceeded) the 25% tax limit. If you're paid monthly you earn £9,166.67 a month. If you work until the end of July, your taxable earnings for that year will be pretty close to the limit for the 25% tax band. That applies to higher-rate tax payers. If you're a lower-rate taxpayer, then to minimise tax in your retirement year (if that really is your goal) then if your pension is going to be above £10k, you should retire on the 4th of April. As I said in my earlier post, anytime is a good time to retire - if you can afford it For many people, the 30th of February will be the best day to retire. Or tomorrow. If you retire tomorrow, go to your local pub. They're giving free beer for retirees tomorrow. Link to comment Share on other sites More sharing options...
mart Posted February 2, 2012 Share Posted February 2, 2012 I have this number for IR if of help 0845 3000 627 Link to comment Share on other sites More sharing options...
max Posted February 2, 2012 Share Posted February 2, 2012 If you need to consider how much tax you get back in order to afford retirement then you're not ready, financially. Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.