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News - 22 April 2013

Pensioners should pay more tax, argues Fabian Society.

The report from the Fabian Society argues that as older people are no longer always poor they should "share the pain of deficit reduction".
 

Researchers for the left-of-centre Fabian Society analysed data from the English Longitudinal Study of Ageing (Elsa).
 

The paper, part of a series produced for the Hanover housing charity, suggests that the majority of older people are neither wealthy baby-boomers with "a surfeit of wealth and leisure" nor "pensioners on the breadline facing poverty, isolation and ill health".
 

However, Age UK said financial options for elderly people were often very limited. Figures from 2010-11 suggest that the real incomes of the middle fifth of all households were no greater than in 2003-04 "but middle incomes for retired households were 13% higher".
 

The report says that when it comes to disposable incomes after housing costs, pensioner couples are now in the top half of UK income distribution because 80% of them are homeowners and most are no longer paying rent or mortgages.
When it comes to taxation, the paper highlights a "really significant intergenerational unfairness", with retired middle-income households paying 27% of their gross income in tax, compared with 33% for non-retired households with the same income.
 

The paper concludes that "in financial terms alone, older people are no longer special", and it calls on the government to assess the evidence for existing rules on social security, taxation and the design of services.
 

Lavinia Newman of ABDS comments:
“The paper says moves to equalise the tax system would have to be carried out more slowly to avoid a sudden fall in living standards. “
 

A Treasury spokesperson said the government was committed to ensuring that older people are able to live with the dignity and respect they deserve and the basic state pension is the foundation of state support for older people.
"In difficult economic times, we have protected the benefits of those who have little means to increase their income, for instance pensioners."
 

A spokesman for the Department for Communities and Local Government said: "At a time when people are fighting for every pound in their pocket a tax hike is the last thing they need. The government has repeatedly made clear it will not be introducing any changes to council tax banding."
 

If you need any help and advice on Inheritance tax or capital gains Tax, don’t hesitate, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar NOW to discuss how ABDS can help in all your financial planning.

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net

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