Tax plans: A 'burden' on low paid

Brian Taylor thinks there should be tax credits for early retirees Send us your comments Tax on savings explained

Gordon Brown axed the lower rate of tax in one of his last acts as Chancellor of the Exchequer.

He softened the blow with measures to help pensioners and by cutting the basic rate of tax from 22 to 20 per cent.

To protect pensioners' incomes, the over 65s will from April have a personal allowance of �9,030 with the over 75s getting an even higher allowance.

Tax expert John Whiting from PricewaterhouseCoopers says that abolishing the 10 per cent rate is going to disadvantage the low paid.

"They don't gain enough from the reduction of the basic rate from 22 to 20 per cent to compensate the extra tax that they'll have to pay on that �2,000 or so of income.

"There's compensation for those over 65 with higher personal allowances, and compensation for those aged over 25 who are in low-paid jobs with better income tax credits. So you're left with early retirees, students, young workers - those are the ones who potentially lose out," John said.

Early retiree Brian Taylor from Devon is just one of many viewers who think the new tax 'burden' should be shared.

"Perhaps some form of tax credits that are not only there for those who are working and not only those with families, but people such as myself and many thousand more who have taken early retirement" Brian told Working Lunch.

Brian has written to the new Chancellor Alistair Darling to try to persuade him to reconsider the changes - but so far he hasn't had any reply.

Find out more about government tax plans from April in John Whiting's exclusively on the Working Lunch website. Click on the link at the top of this page.

Is it possible to take the government to the European courts on women's human rights.

Women retire at 60 at present, men at 65. We are being discriminated against.

Women should get the higher personel allowance at 60 as we retired officially at that age.

Can't we all get together and organise a petition?

Anon.

I will also be a loser without the 10% tax band. I retired three years ago at 60 years old, qualifying for 70% state pension and an occupational pension totalling just over �8,000per annum.

In 2007/2008 tax year I paid around �323 tax, if my calculations are correct I will be paying �550 approximately in next tax year. As we saved for our retirement we are not eligible for pension credits.

This all seems really unfair and surely if a person is in receipt of a state retirement they should automatically have the higher personal allowance

Elisabeth Leggett.

You mentioned the elderly would be covered via allowances and lower paid would be covered via tax credits I do not think this would apply to us, or am I missing something?

My wife earns the princely sum of �6.25 p/hour as a preschool teacher and, for about 25 hours a week grosses about �7,500 per annum. On my understanding, she pays 10% above �5,225 ie �227. Surely after April she will now be paying �454, ie double!

I earn �40,000 which I presume precludes my wife from claiming any credits - but please tell me I'm wrong.

To add insult to injury, I calculate that for me, given Gordon's previous stealth tax (the NI hike this April) I will also be worse off ( by a couple of pounds). So much for his great giveaway last Budget.

Paul Grubb.

From April 6th 2008 anybody earning �7,455- �18,000 will be disproportinally worse off due to the abolishment of the 10% Tax band.

As well as the almost retired, most retail workers throughout the UK will pay �223 more in tax when 10% tax band is removed. Earning up to �7,455 a doubling of tax. eg a person on Mmnimum wage of �5.52 working 26 hours a week.

In Wales, employers only pay just above minimum wage. So thanks to Gordon Brown the less well off will probably be paying for a non dom tax U turn. What a Labour Party. Billionaires get to pay less tax.

I have a suggestion, let's employ MPs from agencies and pay them minimum wage. The only qualifications needed is creative accounting.

Mimimum Wage �5.52 x 40 hours = �220.80 before Tax and N.I. - that's �195 net. MPs get this in meal expenses not to live on week in week out. A sad world for the exploited low paid.

A Griffiths.

Yes, I will be affected by it. It is a bit rich of Labour of all people to be putting an extra tax burden on women and the lower paid that fall into this group.

Surely, once the Chancellor, the then Gordon Brown, realised the mistake that had been made, could have, either phased the 10% tax reduction or given this group an allowance until the economic cycle improves.

We are not all entitled to tax credits in this group whatever the Chancellor may lead you to believe. I hope all who are disadvantaged by this 10% tax reduction on income remember this abuse when the next election comes around!

A Griffiths.

When talking about personal age allowances for those aged over 65 you never mention that the increased allowances do not apply if a person receives pensions or income over �21,500.

For every �2 received over �21,500 the higher allowance is reduced by �1 and is eliminated altogether for the more wealthy, which I feel is very hard.

Where a person's income eliminates the extra allowance any state pension is completely recovered by income tax even after that person has paid for up to 40 years for a state pension.

Also, when a person reaches 80 years of age their pension is increased by 25 pence per week which is nothing but an insult bearing in mind the amount has not ever been increased.

Derek Hoskins.

Could I just point out that it is not only women over 60 who will be affected by this. I am 56, a widow and live on my husband's pension provision plus earnings from a part-time job so I will definitely lose out.

I could not work for many years as I was my husband's carer (saving the government a large amount of money). There is no way that I will qualify for tax credits or any other form of benefit as I own a house.

�2.00 may not be much to Gordon Brown but it is a great deal to a large number of people. Thank goodness for Working Lunch (I am a devotee). If you had not highlighted this, I would have been completely oblivious to the situation

Keep up the good work!

Margaret Fisken.

I have been watching your reports and viewers' views on the issue of women between 60 and 64 who are retired on a low income and are now facing being caught in the new tax bracket of 20% - immediately doubling their tax bill.

I retired at 60 and am now 61. I wrote to Gordon Brown on the 29th March 2007, shortly after his budget and part on the context of my letter was as follows:

"I am so cross about the new tax rates that you announced in the budget last week (especially as my immediate concerns have since been confirmed by many financial analysts), that I feel compelled to write to you.

I am a woman of 60, recently retired. My total pensions (including State Pension) come to less than �7375 so at this time pay I pay 10% tax. In 2008 my tax bill (even with a rise in personal allowance) will go up almost 100%. I would not be eligible for tax credits as I have savings above the maximum to be eligible. Those savings were already taxed under PAYE.

I hear yet again, that you have insisted the low paid can claim any lost income back through tax credits. Even if this were so, what a minefield for them to deal with. However you have still ignored women pensioners like me."

The reply I received (dated 4th June 2007) was written on behalf of Gordon Brown and was three pages long, full of 'facts and figures' (all of which I was already aware of from many of the government's reports) all indicating how better off most will and how those eligible for the Working Tax Credit will benefit from an increase in the threshold up to which the Working Tax Credit is paid in full.

I am not eligible for Pension Credit - I will be approximately �115 a year worse off. I am a woman, yet again, being penalised financially like others in the same position as me, for being a women! Where is equality?

Ann Cater.

Please don't forget the under 25s will be hit by these changes. My daughter is 18 and works in retail on a low wage.

It seems this government is intent on targeting the most vulnerable people in order to support non-doms. Under the current regime my daughter's only hope of improvement is to have a child out of wedlock.

Christine Felton.

In Brown's final budget, the 10% tax band was abolished upwards to 20% to pay for the cut in the basic income tax rate from 22% to 20%.

If the then Chancellor had done exactly the opposite, i.e. increased the basic rate but abolished the 10% rate downwards to 0% by making large one-off increases to everyone's personal allowances, it wouldn't have created losers at the low end of the income scale.

But then Gordon wouldn't have got his precious headlines.

Although your item concentrated on women aged 60-65, most people retiring early on medical grounds will have low pension incomes in the affected range, due to shortened service or restricted final salary, so the change was a Labour Chancellor taxing not just the poor, but permanent and even terminal ill-health.

David Lockwood.

As a person who has paid 39 years of contributions, I qualify for a full State Pension this year. I am very disappointed that this government feels unable to allow me to take advantage of the increased tax allowance which it is giving to men aged 65, who presumably, have also paid the required number of years and contributions.

P Morley.

I am a 59 year old male, having to take early retirement due to ill health. I am on two private pensions which pay approx �10,300 annually. I cannot work and due to my pensions do not get any help.

This will put my tax bill up, on top of increases in council tax, electricity and domestic oil (now at �0.46 per litre!) My fixed income does not stretch very far to enable Gordon Brown to refill his coffers.

On the subject of heating oil, there are no dual fuel tariffs to get the price down, it has gone up nearly 100% in two years. No help with that then from any of the energy companies.

Keep up the good work.

Jeremy Legg.

It is not only women between the ages of 60 and 65 who have retired that this affects. Having been physically disabled since infancy I am now at the age of 58 and no longer able to work.

I also face a doubling of my annual tax bill due to the new tax rates for 2008/09 on my private pension which is �6,300 pa.

I do feel that the government is now penalising me for being disabled. It is alright for government spokesmen to say it's only a couple of pound a week but most of us have to use that couple of pounds towards prescription costs and hospital parking fees.

Is this Labours new manifesto to take from the poor and give to rich?

Michael Brierley.

What about the millions of youngsters on less than �180 a week? They will lose out.

Ralph Williams.

I write regarding the removal of the 10% Tax Band this April and I just wanted to say that this "idea" is an outrage.

I've written three letters since its announcement in last year's Budget, to the then Chancellor Gordon Brown (copies were also sent to my local MP).

Gordon Brown couldn't be bothered to reply and asked his side-kick Ed Balls to reply instead. Unfortunately Mr Balls answered a whole different set of questions (that I didn't ask about), regarding things he was proud Labour have done since coming into power, completely unconnected to my questions about the abolition of the 10% tax band and how it was going to be detrimental to the lower paid worker.

I wrote back to him on two separate occasions but I still haven't received a reply.

My basic (and understandable) complaint is that effectively the lower paid (those earning less than about �18,815 pa) will be funding tax cuts for the better off (those earning more than about �18,815 pa - e.g. MPs). It is scandalous!

Never mind poor pensioners, families, single parent families and other so-called "disadvantaged" groups, what about the ordinary worker in the street?

I've voted Labour all my life, but I won't be voting for them anymore.

Paul Cairney.

I just cannot believe that a Labour government is going ahead with the above proposal - it may only be �2 a week to highly paid Treasury officials (doubtless with generous pensions to look forward to) but to low income pensioners under 65 it is a considerable decrease from an already very low base.

To say it will only apply to about 350,000 people (can that statistic possibly be correct?) and that we are better off than we were in 1997 shows a level of arrogance that I find truly astonishing.

To say in addition that we can find paying jobs (has anyone tried that?) or claim tax credit (not if you have some savings or a husband who will subsidise you) is equally patronising.

I know where my vote will not be going at the next election. Please keep up the pressure on those in high places - I can only give them the benefit of the doubt and assume they did not realise the effect of this decision on very poor pensioners.

Mrs C MacDonald.

The government are working towards a standardised retirement of age of 65, with a graduated timescale.

Being born in December 1952, I am eligible for state pension when I am 62�, but I won't be entitled to the same tax benefits as a man retiring at 65.

This is surely an injustice and should be adjusted for women between 60 and 65 just as the pension inequality is being adjusted.

It will only be for a few years as the anomaly will disappear once the state retirement age is the same for all.

Kathleen Williamson.

Please don't think it's only women affected - despite living near Bristol this a low pay area, I am a railwayman and my grade pay is �13,210 and fifteen staff at the three stations in this area will each lose �157 per year.

This will also include all the care assistants, cleaners, shop assistants etc numbering thousands and any part-timers working to top up their pensions - it is a tax on the poor and this headless government can't see this because they won't bother to look.

It is the arrogance of abusive power too long held. They are so London bound they assume the change won't affect those around them but don't realise that 50 million Britons do not live in London.

Mr. P. Davey.

Having watched your programme for many years I feel I must contact you. You seemed to only mention woman who had a problem with the new 20% tax and your programme seemed to suggest only women over 60 should have some concession.

There are 10,000 men also affected, many who were forced to retire early after the privatisation of many utility companies. If concessions are given by this government then it should be across the board ( men have to wait till 65 for a state pension where as women get it at 60). This tax is robbing the poor to pay to the rich. Not what you would expect from a Labour government.

Dave Jones.

The programme today highlighted the particular impact on women who have retired at 60.

I am male and 62 (this year) and due to having a pension that I had to take at 60 and changes in my place of work I made the decision to retire early.

My pension is �7,000 per annum and the loss of the 10% band ensures that I have a hefty % increase in the amount of tax I pay.

This virtually ensures that the lower paid pay for everyone else's cuts.

My suggestion: The tax office knows who is in receipt of a pension and not working, therefore why not apply the higher tax allowance to everyone over 60 in receipt of a pension (private or state) and not working.

This would be fairer and not discriminate on grounds of gender, and ensure that those who fit the circumstances get it.

Norman.

I am a woman in the 60-64 age bracket, receiving pensions totalling just over �8,000 per year and I will be losing approximately �200 per year because of the abolition of the 10% tax rate.

Anyone who receives pensions of approximately �8,000 must lose approximately �200, so the mention of �100 is entirely spurious. I have already taken this up with the Treasury but have not received the courtesy of a reply. Presumably, this is indicative of how they feel that they can treat a small group of low-income pensioners.

Val Hill.

If I, as a male retire at 60 I will also have to pay the 20% tax, It is a free choice to have kids and stay at home to look after them, so don't blame your reduction in pension on having kids.

I believe in equal rights and thus believe that the woman's retirement age should be brought up to 65 in line with men, equal rights mean equal for every one. Just because you are a woman should not mean you should be treated differently.

Peter.

With the abolition of the 10% rate, some retired women will be worse off between the ages of 60 and 64. But is it not the case that they will be better off under the new system once they reach 65?

This being the case, how many years would it take for these women to better off overall? And how does this compare with the average life expectancy of women in this country? In other words, considering the whole of their retirement, do these changes actually benefit these women overall?

Dan Lambert.

I have also contacted the Prime Minister regarding the loss of the 10% tax band and as yet not received a reply.

I reach 60 this year and like many other women will retire with less than a full pension due to part time working and raising children. I have a very small occupational pension approximately �4,000 per year to add to about �3,500 government pension but keep the same personal tax allowance as any working person and my tax will be doubled after this April.

If I am entitled to a pension why do I not get the extra �4,000 tax allowance that men get when they retire. As women's retirement age is rising gradually it would not be an ongoing expense but would help the millions of women in my age group who were not told of the affects that married women's NI contributions would have in later years.

Why can we not have a pension tax allowance rather than an age allowance?

Brenda Archer.

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