The LITRG looks at how the new 10 per cent income tax band will affect taxpayers on low incomes.
The Low Incomes Tax Reform Group, a body dedicated to making the tax system more friendly to the needs of taxpayers on low incomes, expressed concern tonight
(Tuesday) that the new 10 per cent income tax band will make taxation even more complicated for older people.
Whilst welcoming the reduction of the tax and fuel burdens on older people the group foresees added problems for those on low incomes who already find it difficult to understand the tax system.
The Low Incomes Tax Reform Group was established by the Chartered Institute of Taxation, which represents leading British taxation professionals. The group comments, “The tax calculation which many older taxpayers, who cannot pay for professional help, have to do for themselves, such as checking coding notices or filling in self assessment forms, will now be further complicated and will inevitably cause added worry, cost and stress.”
It is not clear how the Inland Revenue will cope in ensuring that pensioners, who have tax withheld from some pensions at 20 or 23%, will receive the benefits of the new lower rate in the early part of the year. Also many pensioners have savings income and the rate remains at 20%. Once again the Inland Revenue will struggle to get the pensioner paying the correct amount of tax under the PAYE system. Furthermore, the retention of the married couple’s allowance for pensioners perpetuates one of the most complex and confusing provisions in their tax affairs which leads to many errors. Previously the relief was given at 15%; now it is to be given at 10% on a higher figure. It is a recipe for total confusion for a pensioner. The group is campaigning for a tax exemption certificate to benefit older people by taking those with low incomes outside the tax net altogether. It said tonight, “The introduction of such a certificate should now be given added urgency.”
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The Chartered Institute of Taxation, the leading professional body in the United Kingdom concerned solely with taxation, was established in 1930 and received its Royal Charter in 1994. The Institute's primary purpose is to promote education in and the study of the administration and practice of taxation. Members of the Institute have the practising title of “Chartered Tax Adviser”.
Membership of the Institute is open to individuals from all disciplines who are competent and qualified to advise on taxation matters. Entrance is through its associateship examination, from which members may advance to fellowship by thesis. An increasing number of members hold the Institute's qualification as their main professional qualification.
The Institute deals with all aspects of direct and indirect taxation. It is the United Kingdom member of the Confédération Fiscale Européenne (CFE), the umbrella body for taxation advisers in Europe.
The CFE represents a total of over 150,000 tax advisers throughout the European Union and its neighbouring countries. It has two main areas of activity: first to play a full part in the development and operation of tax legislation in the Union; and secondly to support the establishment and maintenance of the rights of tax advisers within the Union. The CIOT has taken a leading role in both these activities.
The CFE was founded in 1959 by the tax organisations of all the original members of the European Economic Community except Luxembourg. The United Kingdom became a member of the CFE following the country's admission to the Community.
In 1989 the Chartered Institute of Taxation sponsored the formation of The Association of Taxation Technicians. This body, with which the Institute maintains a close relationship, provides the qualification "Taxation Technician". Its examination also acts as a stepping stone towards membership of the Institute.
TIR 8/99
Technical Department
020 7235 9381
