TaxPersonal TaxView from the House – Nick Gibb

View from the House - Nick Gibb

On 10 December, the government announced through a written answer that it is not going to reverse the decision taken in its first Budget, in July 1997, to abolish the repayment of dividend tax credits to non-taxpayers.

This will infuriate 630,000 non-taxpayers among whom are 300,000 non-taxpaying pensioners who, in 1995/1996, reclaimed on average #75 per year from the Inland Revenue. Eight thousand of those pensioners reclaimed over #100 per year. These may not sound like huge sums, but they are significant to the individuals concerned whose income is below the income tax threshold.

Most MPs have received many letters on the subject over the last year.

The government’s decision is a disappointing conclusion to a six-month joint campaign by Conservative, Liberal and Labour MPs, together with the charity Age Concern. It is an unjust decision because taxpayers will continue to benefit from the tax credit while non-taxpayers will not. It is an injustice targeted at the poorest members of society and at those who have done the right thing in putting money aside in the form of a few shares.

When I moved an amendment to the last Finance Bill to try to reverse this injustice, the then Paymaster General, Geoffrey Robinson, responded that he would look at the issue again. At the report stage of the Bill, he said: ‘I think the case in the country and the feelings that have been conveyed are considerable. I am sympathetic to that case. I am taking a deep personal interest in it.’

Responsibility for this issue has been taken over by the financial secretary, Dawn Primarolo, and her view is that no injustice exists and nothing is to be done about it. In a Treasury press release, she says that as the new rules do not take effect until April 1999: ‘Individuals have time to consider their investments before the new rules take effect, for example, moving to tax-favoured investments should they wish to do so.’

This is a totally unrealistic and expensive option for most non-taxpayers who may only have a very small portfolio of, usually, privatisation issues.

ISAs hold no advantages for non-taxpayers.

The campaign to reverse this decision will continue both in the House of Commons and in the country.

Nick Gibb is Conservative MP for Bognor Regis.

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