Clash over benefits of 10p band change
Gordon Brown courted the electorate in his Budget address with a widening of the 10% rate of income tax.
In what the chancellor called a ‘billion pound tax cut’, he increased the 10p bracket to £1880 from £1520 in a pre-election giveaway.
Brown said that the measure would benefit as many as 25 million people.
But Conservative leader William Hague hit back saying the cut would only put 75p per week back in the pockets of the taxpayers.
And Francesca Lagerberg of the ICAEW Tax Faculty said it would have be more manageable and simpler to calculate for the taxpayer if the 10% band had been extended to £2,000 instead of £1,880.
The chancellor also announced changes for pensioners’ income. In future, pensioners currently taxed at 22p will be taxed at the 10p rate. This means seven and a half million pensioners will now pay no tax at all or tax at the 10p rate.