Hutton rejects calls for climbdown on new income tax rate

News Article - 08 April 2008
Category: Business

Britain's business secretary has rejected widespread calls for him to back down on plans to abolish the 10p rate for the UK's lowest paid workers.

According to John Hutton, it is not possible to go back on the decision, which is part of a broader programme of tax cuts, including a reduction in standard income tax from 22 per cent to 20 per cent.

Mr Hutton noted in a BBC interview that there are significant concerns about the new rate, but insisted that the measures had been voted on and debated in parliament.

Labour is now facing accusations that it has taken an anti-socialist decision on income tax by abolishing the lowest tax band for workers and campaigners have warned that it will penalise low earners without children.

MPs have hit out at the move, with Lib Dem leader Nick Clegg telling the BBC that it was a "cheap political stunt" that will negatively affect more than five million of Britain's poorest people.

The decision to axe the 10p tax rate was unveiled in the 2007 Budget by then-chancellor Gordon Brown as part of attempts to simplify the tax system. It has been criticised by the Treasury select committee, which claims that anyone earning below £18,500 a year will be worse off as a result of the decision, particularly childless people.

Businesses struggling to adapt to changes in tax legislation should invest in payroll software in order to ensure that their responsibilities are met.

Article keywords:

---

More industry news

• Think tank warns UK may have already slipped back into recession
• Growing demand for HR staff in technology and international sectors
• Boosting business growth a ‘priority’ to avoid Eurozone slowdown
• HMRC launches alternative disputes pilot scheme this week
• December employment statistics disregard gloomy recruitment predictions
• Eurozone manufacturing PMI shows modest improvement
• UK scores highly for economic governance by ratings agency
• Government launches two-year project focusing on manufacturing sector
• Burden of regulation on UK businesses ‘too high’

Back to news home page »