We received a petition asking:
“We the undersigned petition the Prime Minister to scrap the abolition of the 10% tax band to all pensioners.”
Details of Petition:
“The abolition of the 10% tax band will cause huge hardship to poor families and pensioners.If your income is below £18,000 a year your tax liability will double.You will have no chance of enjoying the new 20% lower tax band.This means the poorest of society will shoulder a much higher ratio of tax than those better off.”
· Read the petition
· Petitions homepage
Read the Government’s response
The 10p starting rate of tax was introduced in 1999 as part of long-term reforms to deliver the Government’s commitment to help support low income households. However, with the measures that have been introduced since 1999, particularly the introduction of the national minimum wage and the subsequent introduction of tax credits, we now have more effective ways of targeting resources on low and middle-income households. Since Budget 2007, we have introduced measures that mean around half a million fewer children will be living below the poverty line and 600,000 more pensioners will pay no income tax.
Some 16 million households gained from the changes. The Chancellor has also announced an increase in the personal allowance by £600 to £6035, benefiting all basic rate taxpayers under 65, backdated to this April. This will mean that around 22 million people on low and middle incomes to which your petition refers will gain an additional £120 this year, equal to the average loss that households would have incurred. It will also mean that 4.2 million households will receive as much – or more than – they originally lost. And 600,000 people on low incomes will be taken out of tax altogether.
From September, most basic rate taxpayers will see a one-off increase in their monthly take-home pay of around £60, then an increase of £10 a month for the rest of the financial year. There is no need for taxpayers to take any action: the changes will be put into effect in the same way as Budget changes.
To focus this support on basic rate taxpayers, the threshold at which people start to pay higher rate tax has also been reduced by £600. As a result, the tax liability of everyone that pays tax at 40 per cent will not be affected by the increase in the personal allowance.
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