Tax & Accounting News

Older People ‘Paying Too Much Tax’

29/10/2009

The tax system in the UK is too complicated for older residents, resulting in many of them paying more tax than they need to, according to a report by the National Audit Office (NAO).

An investigation by the public spending watchdog found that 1.5million pensioners are currently overpaying on their taxes, while £500,000 are underpaying.

The NAO said over a third of pensioners did not understand their tax liabilities and were reluctant to ask for help. Common problems were overpaying on income tax and receiving savings income net of tax, when they were entitled to gross payments.

It also found that 3.2million people were failing to take up all of the allowances they were entitled to.

In addition, the NAO said that HM Revenue and Customs (HMRC) made more mistakes with pensioners, as their tax arrangements were more complicated than for the rest of the population. HMRC is to implement a new computer system next year in an effort to address the problem.