Low earners at £7,500 pa remain £32.40 worse off
Accountants Grant Thornton issued this press release yesterday:
Basic rate taxpayers benefit by £120 while low income earners on £7,455 remain £32.40 worse off. Leading business and financial adviser, Grant Thornton, says the Chancellor’s announcement to raise personal allowances to offset losses to low income earners by the abolition of the 10p rate will still leave some low income earners worse off, while benefiting all basic rate taxpayers under 65 to the tune of £120.
Francesca Lagerberg, head of Grant Thornton’s national tax office, says although it is pleasing to see the government, having blundered on this decision from the outset, moving quickly to clean up the mess created for low income earners. However, she is concerned that raising personal allowances by £600 (to £6,035) is not targeting all those affected.
“While the Chancellor’s plan offers a solution to the political problem it does not offer full compensation to those worst hit by the abolition of the 10p rate, as there are still some who will spend the 2008/09 tax year worse off,” she says. “Furthermore, and rubbing further salt into the wound of those low income earners who have not been helped by today’s announcement, is the fact that a large number of middle income earners will benefit from the raising of the personal allowance by £120 as well*.”
“The Chancellor has delivered an essentially unfunded early Christmas present to a large number of UK workers, but failed to undo its mistake for around 1.1 million low income households.” Lagerberg says many UK workers will be up-beat about the announcement expecting an additional and unplanned boost to their income, but those earning £7,455 will still be £32.40 in arrears come the end of the 2008/09 tax year.
A “one off” payment, secured through a loan, meant to solve a political problem for the Labour Party, which the people of South Shields and elsewhere will have to pay back sometime in the future. Here’s the gamble, if Labour’s fortunes climb out of the gutters the next Chancellor (for surely Darling will be replaced at the earliest possible opportunity by Miliband) will have a year to sort out the mess, if Labour’s fortunes continue to ebb away down the drains then “Call me Dave” Cameron and “Boy George” Osborne will be saddled with a £2.7bn debt that they didn’t need!
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