Written by Karen Bryan
When the UK Chancellor announced that personal tax allowances for those aged 65+ will be frozen from April 2013, this move was dubbed the “Granny Tax“. However, as personal tax allowances for those under 65 are to rise by more than the rate of inflation, I think the new regime is fairer to all UK taxpayers.
Personally, I’ll probably be worse off with the forthcoming changes in the UK tax thresholds. I’m 53, so if I reach average life expectancy, I’d pay less tax with the old regime.
Why should you get more money tax free because of your age? I suppose the logic was that people aged 65+, a high proportion of whom are retired, would have lower average incomes than those of working age. But what about all these workers on the minimum wage? There’s also a higher likelihood of older people owning their homes outright, so not having to cover mortgage or rent payments in their living expenses.
I’ve argued that the UK tax threshold should be increased so that no-one who works full time on the minimum wage, ie.£12,466 per year before deductions, would have to pay tax. So there’s still a long way to go before this is achieved, as the Government plan to have a UK tax threshold of £10,000 for those under 65 by the tax year 2014-2015.