In a HM Revenue and Customs report, Leigh says while older people are more likely to comply with their tax obligations than other taxpayers, many are “getting a raw deal”.
In the report, Leigh concluded that systems for dealing with older people’s tax affairs are too complex, create uncertainty for older people and result in too many overpaying tax.
He is now calling for the HMRC to establish a clear plan by June 2010 to make it simpler for older people to fulfil their tax obligations and reduce the level of error in their tax.
The report says: “The department should track the costs of helping older people with their tax affairs, the quality of service it provides and their take-up of allowances. It should estimate the likely impact of the forecast growth in older people, and decide how it will provide effective support for older people as the number of older people increases.”
The report also identified that the HMRC does not know for certain how many people are eligible for age-related allowances but do not receive them, and that the age-related allowance rules are complex and hard for older people to understand.
The report continued: “The department should establish accurately how many older people have not claimed the age-related allowances but are eligible to do so, and identify the steps it will take to ensure they receive the allowances due to them.”
It also says once the rollout of the new PAYE system is complete in 2010 the HMRC should provide clear documentation which explains clearly how their tax code is calculated and how tax will be deducted from each income source.