Pensioners: How To Regain Tax From The Government

18 September 2015

New statistics published on 18 September 2015 by Prudential show that the over-65s are handing over a staggering £17.5 billion to the Exchequer – that’s 11% of the total annual tax take. David Smith, Director of Financial Planning for Tilney Bestinvest investigates how pensioners can get some of this tax back.

Post-retirement, the vast majority of UK pensioners do not complete annual tax returns. This is perceived as a blessing, as young and old alike detest completing HMRC’s daunting annual return. However, the sad reality is that your tax code may be incorrect, which could mean that you are paying more income tax than necessary. The great news is that you don’t need to make that worrying call to HMRC to have your tax code checked – there are many online calculators that can do this for you.

It’s now also commonplace to see many still needing, or often wanting, to work past the state pension age. Remember, you shouldn’t be paying National Insurance on these earnings. More and more pensioners need to rent out rooms in their own home just to get by.  Remember, the ‘Rent a Room’ scheme, where you offer a room to a lodger, can allow you to receive up to £4,250 in rent each year tax-free*.

Too often, we see the majority of savings held in a sole pensioner’s name. Often this person is the main breadwinner and therefore the highest taxpayer. Remember that assets can be switched between spouses without any tax implications whatsoever, so try and ensure that investments subject to income tax are held in the name of the lowest taxpayer.

By far the most common issue we see is a pensioner selling OEICs and Unit Trusts without ever planning for disposal, or considering the tax implications. When a married couple own an asset jointly, a gain of £22,200 (2015/16 tax year) can be realised before CGT becomes payable. Again, the inter-spouse exemption can be used to pass between partners without it being classed as a disposal for CGT purposes. This means that individuals can pass all, or part, of their portfolio to a spouse who may have more CGT allowance available, or who may be subject to a lower rate of CGT on disposal.

Many people have amassed portfolios of funds, investment trusts and shares and/or investment properties over the course of time – all of which are assessable to CGT. However, assets only become assessable when a disposal event occurs, which could be via the sale or the transfer of the asset to anyone other than a spouse.  Unless a disposal takes place, the annual allowance is never called upon, nor can it be carried forward to future years; it’s effectively a valuable benefit lost. As a result, many investors are hit with sizeable tax liabilities when they eventually come to surrender and/or transfer long-held assets to children and their grandchildren. Yet, with careful ongoing planning, some or all of a portfolio can be sold to fully utilise an individual’s annual CGT allowance - without ever creating a tax liability.

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Press contacts:

Jason Hollands
0207 189 9919

Gillian Kyle
0203 818 6846

Important information

Investments can go down as well as up. This article is not advice to invest or to use our services. Prevailing tax rates and the availability of tax reliefs are dependent on your individual circumstances and are subject to change. Please note we do not provide tax advice.

It is important to consider all of your options, especially in light of the new pension reforms. If you are unsure of your options you should seek professional financial advice or visit

About Tilney Bestinvest

Tilney Bestinvest is a leading investment and financial planning firm that builds on a heritage of more than 150 years. We look after more than £9 billion of assets on our clients’ behalf and pride ourselves on offering the very highest levels of professional client service with transparent, competitive pricing across our entire range of solutions.

We offer a range of services for clients whether they would like to have their investments managed by us, require the support of a highly qualified adviser, prefer to make their own investment decisions or want to take more than one approach. We also have a nationwide team of expert financial planners to help clients with all aspects of financial planning, including retirement planning.

We have won numerous awards including UK Wealth Manager of the Year, Low-cost SIPP Provider of the Year and Self-select ISA Provider of the Year 2013, as voted by readers of the Financial Times and Investors Chronicle. We are pleased that our greatest source of new business is personal referrals from existing clients.

Headquartered in Mayfair, London, Tilney Bestinvest employs almost 400 staff across our network of offices, giving us full UK coverage, and we combine our award-winning research and expertise to provide a personalised service to clients whatever their investment needs.

The Tilney Bestinvest Group of Companies comprises the firms Bestinvest (Brokers) Ltd (Reg. No. 2830297), Tilney Investment Management (Reg. No. 02010520), Bestinvest (Consultants) Ltd (Reg. No. 1550116) and HW Financial Services Ltd (Reg. No. 02030706) all of which are authorised and regulated by the Financial Conduct Authority. Registered office: 6 Chesterfield Gardens, Mayfair, W1J 5BQ.

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About Tilney

Tilney is a leading investment and financial planning group that builds on a heritage of more than 180 years.  Our clients are private investors, charities and professional intermediaries who trust us with over £23 billion of their assets. We offer a range of services including financial planning, investment management and advice and, through our Bestinvest service, a leading online platform for those who prefer to manage their own investments.

We have won numerous awards. Tilney has been awarded Best Conventional Advisory Service at the 2018 City of London Wealth Management Awards, Best Advisory Service in the 2015 City of London Wealth Management Awards; Investment Award – Cautious category in the Private Asset Management Awards; and Stockbroker of the Year, Execution-only Stockbroker of the Year and Self-select ISA Provider of the Year 2015, as voted by readers of the Financial Times and Investors Chronicle. Bestinvest was voted Best SIPP Provider and Best Fund Platform at the 2017 City of London Wealth Management Awards, Best Direct SIPP Provider at the Awards 2017, Best Stocks & Shares ISA Provider at the 2017 Shares Awards, as well as Best Self Select ISA Provider, Best Online/Execution-only Stockbroker and Best Investment Platform 2017 at the FT and Investors Chronicle Investment and Wealth Management Awards, as voted by readers of the FT and Investors Chronicle.

Headquartered in Mayfair, London, the Tilney Group employs over 1,000 staff across our network of 30 offices, enabling us to support clients with a local service throughout the UK.