Have you got a pensions and retirement question which you’d like money expert Jasmine Birtles to answer? Get in touch by emailing your query to [email protected], or commenting below.
Question: “I’m a pensioner, 69, and in full-time employment. My tax code for next year has been calculated at 191 which I believe means I can earn £1,900 before I pay tax as my state pension is deducted from my non-taxable threshold of £12,750. I think this means I don’t get a state pension at all.
“My wife and I are also foster carers and she doesn’t use all her code, is it possible for her to transfer what is left of her code to me?
“We are both registered foster carers and both 20 per cent taxpayers and have no outside income from elsewhere. Hope you can help.”
Jasmine replies: Wow, that’s an interesting question, and I’m so pleased to hear that you and your wife are foster carers.
There is such a need for good people to do this in the UK. I hope more people follow your lead on this!
When it comes to your tax question, I asked Gianpaolo Mantini, Partner at Saltus, first and he said: “You’re correct in thinking that the numbers in your tax code signal how much tax-free income you can expect to receive. In this case, £1,910.
“The state pension is taxable, but pensioners are not on a state PAYE system with the DWP.
“In effect, all that occurs in lieu of this is that your personal allowance is reduced by the amount of state pension you receive.
“You mention you don’t ‘get a state pension at all’. This shouldn’t be the case as your tax code infers are currently receiving the maximum state pension (£205/week) of £10,660 per annum (£12,570 – £1,910) from the Government.
“Please contact the Pension Service if you believe you are not receiving the correct level of income.
“Any income from your employment received in addition to this will then be taxed at 20 per cent in line with your marginal rate, excluding the £1,910 which will use up your remaining personal allowance.”
As foster carers, I’m guessing you registered as self-employed with HMRC when you started to foster. A tax exemption of up to £18,140 per household is available for any money you earn from fostering directly.
This should mean that any income you receive from fostering that is under this threshold won’t use any of your personal allowance.
If you earn more than this threshold from fostering, further relief is available for every week (or part week) that a child is in your care.
Mantini added: “The marriage allowance for the 2024/25 tax year is £1,260.
“As you are a basic rate taxpayer, this means your wife can give you £1,260 of her personal allowance.
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Married couples and civil partners may benefit from tax relief overall by claiming marriage allowance
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“It’s worth noting that you can also backdate this claim to include the current tax year and up to the last four tax years that you were eligible for Marriage Allowance.
“Your tax bill will be reduced depending on the Personal Allowance rate for the years you’re backdating.
“You can apply for the marriage allowance via the government website.”
Jasmine Birtles is a personal finance expert, TV and radio presenter and author of 38 books. Her website, MoneyMagpie.com, covers all aspects of personal finance from money-saving and money-making ideas to investment and pensions information.
