Treasury select committee chairman John McFall says the Government’s abolition of the 10 pence rate of income tax disadvantages mainly low income households and that the Government should help them.
McFall says those below the age of 65 with an income under £18,500 who are childless are most at risk of being hit who McFall says are “unreasonable” targets.
The Treasury Committee in its report on the 2008 Budget also says that there has been insufficient consideration of the possible impact of tax changes on the middle and lower income groups of non-domiciled taxpayers.
It says this is due to the focus on wealthy individual non-domiciles and says it is concerned that the new policies wil create a group of non-domiciled taxpayers who would be unwittingly in breach of the new law.
McFall says: “There has been too much focus on the very wealthy non-doms, and almost no notice taken of the low and middle income groups who will be affected by the changes. We have highlighted a serious risk that HMRC will be faced with the problems of potentially millions of foreign workers, either seeking advice or unwittingly in breach of the new law.
“While tax simplification is a laudable aim, it seems strange that the abolition of the 10 pence starting rate of income tax, disadvantages mainly low income households. As such, the Government must ensure that these people are identified, and appropriate help given to them to ensure they receive the benefits to which they are entitled.”