U-Turn on 10p Tax Rate

The Chancellor intends to compensate those that have lost out due to the abolition of the 10p tax rate.

The move by Alistair Darling is not a complete u-turn to restore the 10p tax rate, that was removed in his Budget 2008. Instead he will "compensate" "pensioners and young people".

The chancellor had been widely criticised for the move to simplify the tax regime due to the lowest paid workers being most affected by the abolition of the 10p tax rate.

In his defence, Alistair Darling added that tax credits, winter fuel payments were going up but this still doesn’t address the fact that low-paid single people are worse off despite the changes. He expects to look at the National Minimum Wage in order to help out the lowest paid.

The compensation deal will be announced near the end of this year and payments backdated to the start of the tax year.

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