Published on 30 May 2007

Older people on low incomes -The case for tax reform

Reports

For too long pensioners on low incomes have been a low priority in the tax world of HMRC. The merger of the old Inland Revenue and Customs & Excise has focused on business tax to the detriment of the low-income pensioner. LITRG’s latest report ‘Older people on low incomes: the case for tax reform’, published on 30 May 2007, explains the tax problems of becoming a pensioner, suffering bereavement or going into care. It also highlights key areas where HMRC make mistakes, and outlines reforms.

A red paper with a tear in the centre, through the tear the word 'REFORM' can be seen in bold black text
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At the end of the 1990s LITRG published two detailed reports about how the tax authorities treated the pensioner on a low income. Many years later and despite many customer initiatives the low-income pensioner can still expect:

  • to overpay tax on a regular basis;
  • inadequate information on how they are being taxed;
  • a lack of liaison between the Department for Work & Pensions and HMRC in dealing with them in a joined-up way.

John Andrews , Chairman of the Low Incomes Tax Reform Group, commented:

For too long pensioners on low incomes have been a low priority in the tax world of HMRC. The merger of the old Inland Revenue and Customs & Excise has focused on business tax and it is now time for the tax problems of the low-income pensioner to become a priority for HMRC.

In its latest report - Older people on low incomes. The case for tax reform,LITRG explains the tax problems, of becoming a pensioner, suffering bereavement or going into care. It also highlights many key areas where HMRC make mistakes and outlines reforms.

LITRG have set out a road map of simple change which, if implemented, would make the lives of millions of pensioners that much better.

Rob Ellerby, President of The Chartered Institute of Taxation, added:

All citizens need to be given the tools to help them understand their tax position. This report shows that HMRC have still a way to go in that regard. Some people, particularly older people on low incomes, may never be able to fathom the complexities of the tax system and need extra help and support from government agencies.

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