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Government urged to act on pensioner tax overpayments

23rd October 2009 Print
Commenting on today's National Audit Office report which estimates that 1.5 million pensioners are paying more tax than they need to, John Andrews, Chairman of the Low Incomes Tax Reform Group, said: "This damning report sadly comes as no surprise. The Low Incomes Tax Reform Group has written three reports over the last 12 years identifying these problems and their causes. In that time HMRC have only paid lip service to correcting the fundamental faults in their service strategy.

"There needs to be more joined up government between HMRC and the DWP, and there has to be much more effective reaching out by central government to provide older people with information and advice, through local authorities and local advice centres.

"It is not often that we can heartily endorse almost every word in a NAO report, but this is an exception. It is well-researched and provides key insights into the reasons why HMRC do not give an adequate service to their older customers. The NAO have shown that an investment in changing processes now will pay greater dividends later and support the wider government strategy as expressed in ‘Building a society for all ages'.

"We have spent over 10 years in campaigning to see many of the changes now proposed and hope that the government and HMRC will grasp this opportunity to make a significant change for the benefit of older people. Anyone promising these improvements would, we are sure, get the appreciation of the older electorate."

The Low Incomes Tax Reform Group is calling on the Government and HMRC to:

Ensure more and better liaison between HMRC and the Department for Work and Pensions (DWP)

Ensure older people get the financial support to which they are entitled

Review the complex age-related allowance structures

Award the age-related allowance automatically without the need for a claim

Improve the take-up of Blind Person's Allowance by data matching with local authorities

Obtain the banks' co-operation in ensuring that tax is not withheld inappropriately from interest paid

Consider centralising the tax affairs of pensioners so as to get the benefit of staff specialisation

Explore the possibility of the DWP operating PAYE on the State Pension for selected pensioners so taking them out of the Self Assessment system

Provide a single notification which explains how HMRC have allocated allowances against several PAYE sources

Get HMRC to participate in "one stop" local advice centres to benefit older people

Work with the Department of Health and local authorities to provide better information and services for those older people who employ personal carers