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Published on 10 January 2004

Older people on low incomes - Case for a friendlier tax system

This report analyses the position as at December 1998 and made over 30 recommendations for change.

This is the first report of the Low Incomes Tax Reform Group (LITRG) of the Chartered Institute of Taxation, which was established:

To target for help and information those least able in the community to afford tax advice and make a real difference to their understanding of taxation and to work to make the tax system more friendly to their needs.

We chose older taxpayers as the priority group to review, because those on low incomes:

  • Have less access to support, such as a payroll department or a professional tax adviser
  • Are more likely than younger people to suffer from physical disabilities impeding their ability to deal with their tax affairs
  • Often have to cope with tax issues, for the first time, following bereavement
  • Face a tax system that is particularly complex for those aged 65 or over
  • Must deal with PAYE and tax withholding systems which are not geared to their needs

The number of older taxpayers as a proportion of the total population is set to rise into the new millenium at a time when the resources of the Inland Revenue are set to decline and where older people, as a group, may not be viewed as a priority when assessing customer service needs. However, we were encouraged by the Prime Minister’s commitment to help the very old or frail to obtain an excellent service from government departments in the recently-launched Better Government for Older People programme.

We believe that meeting the needs of older people on low incomes should be a priority for both government and the Inland Revenue, and also believe that a considerable difference can be made to their understanding and comfort with the tax system at little or no overall cost.

We have spent nine months reviewing the tax regime facing older people on low incomes, drawing upon the knowledge and experience of our members and of their organisations (see Appendix A), while a member of the group visited North America to study tax volunteer schemes. We also invited comments from members of the public, through several requests in the media, and received close to 300 letters detailing some of the difficulties experienced in practice.

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