It was reported this last week that 1.5 million UK pensioners are paying too much tax which is because too much is being deducted from their occupational and private pensions and from any employment earnings they have. Once upon a time of course, most pensioners with taxable income of any sort had to complete tax returns. Since the introduction of Self Assessment in 1996-97 and increased automation and exchange of information as well as significant job cuts in what has become HM Revenue & Customs, far fewer people have to complete tax returns. In itself this is sensible, because why should people have to worry about form filling if it is not necessary, and can be dispensed with? However, if we have a more “automatic” system, it should work and be seen to work. This means that if age allowances are due then they should be allocated, and it should be easier for the public to talk to the Tax Office about their issues.
I believe information should be supplied to every household in the land explaining the system of personal allowances and how direct taxation works at its most basic level, but in reality, the only time most of us get any proper information about the workings of our liabilities to tax is if we actually have to complete tax returns ourselves. For the rest who just have periodical Notices of Coding, HMRC is simply explaining why they are doing what they are doing, and leaving out information which they perceive as irrelevant but which may not be.
Of course, the public may talk to someone at an HMRC call centre if they think they have problems or are being taxed incorrectly, but they need to know they have a problem first. Some no doubt complain about high taxes without knowing that they are being overcharged. This of course takes me back to the point a made a few months ago about “progress” disenfranchising the non-technical population.
© Jon Stow 2009
BBC: 1.5m pensioners 'overpaying tax'