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10P rate rescue will continue

The Government has committed to extending its 2.7bn 10p tax compensation package to future years.

The Institute for Fiscal Studies called on the Government last week to extend its “one-off income tax cut” after it calculated that 18 million families would be worse off by an average of over 150 a year as a result of tax and benefit changes over the next two years.

In early May, the Chancellor set out a 2.7bn package to compensate some of the 5.3 million people affected by the abolition of the 10p tax rate. It involves increasing personal allowances. The Government expects the package to give 22 million people an extra 120 this year.

But the Government was slammed for not confirming whether the support would extend to future years. Conservative Shadow Chancellor George Osborne said Gordon Brown’s “cynical manoeuvre to save his own political skin will leave 18 million people facing a tax rise next year”.

But the Treasury confirmed to Money Marketing that lowearners would receive similar support in future.

A spokesman said: “For future years, our aim is to continue the same level of support for those on lower incomes. We will set out our plans for future years in the pre-Budget report.”

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