New tax changes launched this week are set to punish the low-paid, MP’s have said.
New tax changes launched this week are set to punish the low-paid, MP’s have said.
The decision to scrap the lowest 10p rate income tax band means that childless people in low-paid jobs will be penalised and could lose out by as much as £232 a year.
In its Budget report, the Treasury Select Committee said the “main losers” – households without children or anyone over the age of 65, and on incomes of under £18,500 a year – would lose out.
Committee Chairman, John McFall, said: “While tax simplification is a laudable aim, it seems strange that the abolition of the 10p starting rate of income tax disadvantages mainly low-income households”, and that they were an “unreasonable target” for the tax simplification measure.
Chiltern’s Nathan Gladwell says: “Despite the 2 per cent cut to standard income tax and tax credits being increased, the scrapping of the lowest 10p band will affect some lower-paid workers.
“The financial strain is already significantly affecting these people, who are feeling the pinch in their purses with the rising costs of petrol, fuel and energy bills. More needs to be done to ensure they get the right benefits so any advantage from tax-credit increases can be gained.”