TaxPersonal TaxThe chancellor has not gone far enough to help old people cope with the tax system

The chancellor has not gone far enough to help old people cope with the tax system

The Low Income Tax Reform Group is pleased that the chancellor has decided that the poorest pensioners will receive more in their pockets through the benefits system. But there is disappointment that he has not taken the opportunity to revamp the overly complex and bureaucratic tax system which faces many hundreds of thousands of the poorest pensioners.

The LITRG has demonstrated through two reports that this system causes worry, distress and cost to the pensioner group quite disproportionate to the tax liabilities involved.

The Married Couple’s Allowance withdrawal for those pensioners born after 5 April 1935 announced a year ago (and due to come into force from 6 April 2000) will add further complexity to a system already incomprehensible to most elderly people.

The withdrawal of the widow’s bereavement allowance, also with effect from 6 April 2000, will also remove an allowance primarily received by those in retirement.

It is also a pity that as he raised the savings amounts that pensioners may hold in order to qualify for benefits he did not raise again the amount of savings income that pensioners may receive before receiving the dreaded Self Assessment form.

The rise in the age related personal allowances given to pensioners from £5720 to £5790 for those under 75 and from £5980 to £6050 for those 75 and over were the minimum required by legislation.

We pressed the Inland Revenue to include these levels in the codings issued to pensioners in January and February and due to be operative in April.

But they refused. This means that pensioners will be making interest free loans to the Government in April as the PAYE system deducts too much from them until the Inland Revenue issue new code numbers for May and pensioners have their loans repaid to them.

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