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 |
