The Chancellor announced today that the Government will freeze age allowances from 2013/14 for those already receiving them by then, and abolish them for those reaching 65 thereafter, resulting in everyone eventually being entitled to a basic personal allowance which will be the same regardless of age.
Robin Williamson, Technical Director of the Low Incomes Tax Reform Group (LITRG), commented:
“Many older people never claim their age-related allowance because they do not realise they are entitled to it. This measure will at least simplify matters for them without creating any losses in cash terms.
“However, in the course of simplifying one aspect of the tax allowances system, it risks introducing a new set of complexities. Alongside the married couple’s allowance (to which entitlement is limited to couples one of whom was born before 6 April 1935), we will now have a confusing array of age-related allowances fixed by date of birth.
“We are not sure this is therefore the solution the Office of Tax Simplification might have envisaged when they observed that age allowances are an area of complexity for pensioners. Perhaps the Government would have done better to wait for the OTS’s considered recommendation before rushing headlong into legislating.”
Notes to editors
- The Low Incomes Tax Reform Group (LITRG) is an initiative of the Chartered Institute of Taxation (CIOT) to give a voice to the unrepresented. Since 1998 LITRG has been working to improve the policy and processes of the tax, tax credits and associated welfare systems for the benefit of those on low incomes.
Technical Team
21 March 2012
