Age Allowance

If you lose part of your age allowance because your income is over £9,800, you will benefit particularly from an income plan because your total income for tax purposes will be reduced by the gross amount of the loan repayment before the tax relief is deducted.

As a result your age allowance will increase. See http://www.hmrc.gov.uk/incometax/personal-allow.htm

Non taxpayer If your income is too low to pay tax, you will benefit slightly more than someone who pays tax at the lowest rate.

You will still get the interest on the loan reduced as if you paid tax. But you will not have to pay tax on all the extra income. However, the extra income from the plan may mean that you have to start paying some tax.

Higher Tax Allowances If you pay tax at the higher rate, you will benefit more than a standard rate taxpayer.


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