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Citizens Advice calls for 10p tax rate compensation

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29/04/2008

Citizens Advice has written to the Chancellor urging the Government to fully compensate everyone who is worse off financially from the removal of the 10p starting rate of Income Tax.

The charity has called for any compensation to be introduced quickly and effectively, taking into account any potential barriers such as difficult claiming procedures.

Citizens Advice stresses that any compensation package must include bringing those under 25 without children into entitlement to working tax credit (WTC). The charity is also calling for carers to qualify for WTC at 16 hours, recognising that their ability to work full time is limited and addressing the low level of benefit take up in the groups who have lost out as a result of this change – less than one in four households without children entitled to WTC actually claim it.

Katie Lane, Citizens Advice social policy officer, said: “Every year Citizens Advice bureaux provide advice on nearly 3.5 million problems relating to welfare benefit, tax credit, and debt. The effect of the removal of the 10p starting rate of Income Tax is therefore of great concern to us.

“While we welcome the Government’s recent commitment to compensate those who have lost out, it is vital that any measures can be introduced quickly, are backdated and are easy for people to receive. Any barriers, such as complex claiming procedures could cancel out any positive impact.

“Whatever package of remedies is ultimately implemented it is absolutely essential that they are accompanied by significant measures to dramatically increase take-up of means tested benefits and tax credits by families in low paid work, and to improve the standards of service provided.”

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