Low-earners lose big with tax changes
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The removal of the 10p tax rate was pre-announced in Gordon Brown’s Budget last year and came into effect as the current tax-year began on 6 April.
The Government only introduced the 10p tax rate in 1999, when Gordon Brown was Chancellor.
In response to the Treasury Select Committee report, the National Consumer Council (NCC) called on the Government to address the needs of the UK’s five million working poor who will be penalised by the abolition of the 10p tax rate.
Meanwhile, the Institute for Fiscal Studies estimates the losers will include:
* 2.2 million single working people with no children
* 1.2 million double-income couples with no children
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* 700,000 double-income couples with children
* 500,000 non-workers
* 400,000 single-income couples without children
* 300,000 women aged 60 to 64.
Take from the poor to give to the rich
In research to be published in July, the NCC says it will highlight the plight of low-income workers and call on the Government to recognise the needs of those on low incomes who fall outside their policies on social exclusion.
“The Government must address the needs of the UK’s working poor, who are at serious risk of poverty and social exclusion,” says the NCC’s Nicola O’Reilly.
“Our research shows workers who don’t claim benefits feel ignored. Government policy should help people to help themselves.”
To find out if you’re likely to be affected, or how you can minimise the damage you can start by finding a qualified independent financial adviser (IFA).
You can then see in detail how tax rules, including the recent changes, apply to your unique financial situation, now and in the future – and ultimately decide what’s right for you.
IFAP also has a tax waste calculator and tax basics guide that will help you get to grips with the main issues involved in saving tax: everything from the benefits of individual savings accounts (Isas) to tax-efficient planning for your income in retirement.
