Personal allowance commitment welcomed by tax campaigners - LITRG Press Release

Published on 20 March 2013

The LITRG has welcomed the confirmation in the Budget that the personal income tax allowance will rise to £10,000 for 2014/15.

Anthony Thomas, Chairman of LITRG said:

“The projected increase in the basic personal allowance to £10,000 from 2014/15 will be a worthwhile boost to the incomes of the lower paid and is very welcome.”

In previous years LITRG has warned that many benefit recipients only receive a fraction of the benefit of personal allowance increases. This is because of the way in which tax reductions interact with means-tested benefits based on the claimant’s net income.

LITRG has pointed out that if a welfare payment is based on after-tax income, then the lower the tax bill the higher the income figure on which benefit entitlement is based. Consequently, the lower the benefit entitlement becomes – indeed recipients of, say, housing benefit may only see 15% of any tax reduction because of that interaction.

Anthony Thomas continued:

“Taxpayers who are in receipt of means-tested benefits which are calculated on net income have not seen the full benefit of tax reductions in recent years. While most people on incomes of £10,000 or more are no longer receiving means-tested benefits, the introduction of universal credit may well change the picture quite significantly as the new benefit is paid to people higher up the income scale. This is something we will keep a close eye on.”

(20-03-13)

Contact: Robin Williamson (please use form at http://www.litrg.org.uk/ContactUs)