“Because of my circumstances and age – I’m 79 – I also receive Housing Benefit of £166.74 twice a month plus the higher rate of Attendance Allowance [worth £434.20 a month].

“Will these benefits be included when HMRC calculates my tax-free allowance?”

Jasmine replies: First things first, it’s important to revisit the tax-free personal allowance and what this applies to.

This is essentially the amount of income you do not have to pay tax on, and the standard personal allowance is £12,570 per tax year.

Generally speaking, income above your personal allowance is subject to tax.

This is why we pay tax on money we make from employment that is greater than the personal allowance, and the same goes for pension income, as well as profits if you’re self-employed.

However, not all income is liable to tax and this includes some state benefits.

Fortunately for your situation, Housing Benefit and Attendance Allowance are tax-free benefits therefore these income payments do not enter the calculation.

Do you have a money question you’d like Jasmine to answer? Email money@gbnews.uk.

Alice Guy, head of pensions and savings at interactive investor, adds:“It’s tough for pensioners on a low income because they must pay income tax on any pension income over £12,570, including the state pension and any private pension income.