| Since the start of the
tax year the basic rate of income tax has
been reduced from 22% to 20% and the
starting rate of 10% abolished for income
except for savings and dividend income.
The government has faced opposition
over the tax rate change which was
announced in the 2007 Budget. Those on
low wages and some pensioners are
receiving less net income than they did
before the end of the tax year. The change
has faced much criticism as not all those
who lost out on the removal of the 10%
band for earnings are able to claim tax
credits to supplement their income.
Around 40 MPs apparently signed a
motion challenging the decision which
according to MPs left more than five
million low earners worse off. The
government has announced that it will
“compensate” those individuals who are
worse off. It is unclear quite how this
compensation will work due to the
individuals differing personal
circumstances.
We will keep you informed of
developments.
Internet link:
BBC news and
Financial Times article |
