Tax Rule Vexes Older Married Couples

The letters you send to Saga Magazine are as good a guide as anything to what you are concerned about. And at the moment the Government’s plans are your favourite complaint.

Let me start with tax. Now by the time you read this you will have the advantage over me. I do not know, as I write, what is in the Chancellor’s Budget on March 21^st. You will now do so as this Saga Magazine should land on your doormat around the end of March (and I will be giving a full summary of how the Budget affects Saga readers in the May edition). But I am going to stick my neck out and say it seems very unlikely that he will do anything to relieve the anger of thousands of older people who are going to lose the married couple's tax allowance just as it becomes worth having.

This change was announced by the Chancellor a year ago in the 1999 Budget. From the new tax year which starts on April 6^th 2000 the married couple's allowance will no longer be given to any couple where both are under the age of 65 on that date. Now for younger couples, the allowance is not worth much any more. In 1999/2000 it was worth just £197 in the whole tax year. Nearly £4 a week is not to be sniffed at, but its disappearance in the same year as the basic rate of tax is expected to be cut to at least 22p in the pound is hardly going to be noticed. But for people aged 65 or more the married couple's allowance IS a big deal. It means more than £510 off the tax bill – and that is around 14% of the value of the state pension. So it is important.

When the Chancellor announced its demise he said that he would not take it away from couples where one partner was already 65 at April 6 2000. And any couple who subsequently married would still get it as long as one of them was born before April 6 1935. But that is little comfort to people born just after that date who had been looking forward to a bit of extra tax relief as they retired. GH writes from Leeds

"A married couple where one was born on 4/4/35 will be about £10 a week better off than a couple where both spouses were born on 6/4/35 – FOR EVER! If this is a once and for only cut off it seems a grossly unfair piece of legislation."

And the unfairness is personified in the family of Peter, a reader in Dorset.

"I will be 65 after April 5^th 2000 and I have been notified I will lose the allowance whereas my brother-in-law who is 65 before that date retains it!"

It is true that Peter’s brother will be £10 a week better off than Peter for the rest of the time that both they and their spouses live. It is a once and for all cut-off date and, barring some miracle in the Budget, I cannot offer a solution.

There is better news for Mrs T from Devon

"I am aged 85. My TV licence is due for renewal on 31^st July this year. Will I have to renew it or will I be able to claim a free one? It is not very clear and I would hate to be caught out but I would also hate to spend £101 of my short cash."

The Government promised free TV licences for older people in the Draft Budget in November. And it has now published the details of how the scheme will work. Anyone who is over 75 will be able to get a free TV licence from November 1 2000. Anyone over-75 whose licence expires after April 1 will be able to buy a ‘short-term’ licence for the months until that date. And anyone who has paid for a full year already will be able to get a refund for the months after November. So Mrs T will have to pay about £35 to take her up to November 1^st and then it will be free.

The licence will be available free to anyone aged over 75 for their main residence. So if they live with younger relatives, the licence will be free. Every residence will still need a licence – but it will be free for any home where someone aged 75 or more lives as their main residence. Anyone who may be eligible should contact the Post Office or call TV Licensing on 08705 763 763.

For everyone else, the licence is going up. It will be up by £3 at £104 a year from April 1 (£34.50, up £1, for a black and white licence). People who are registered blind will get a 50% discount on the licence from that date. If you have no television you do not need a licence for a radio.

Not such good news though for men aged 60 to 64 (and some others) who are still waiting for their winter fuel payments four months after the European Court ruled that another one and a half million people should get the £100 cash bonus. Last month I explained how John Taylor, a retired postman from Yorkshire, took the Government to the European Court and won. He said that paying the winter fuel payment to women at 60 but making him wait until he was 65 was sex discrimination and the court agreed. Since then, though, the Government has not worked out how to get the £100 payment to the one and a half million men who are entitled. The experiences of David James from Worcester are typical of a large number of letters on this subject.

"I called my local Benefits Agency office this morning who referred me to a Helpline in Newcastle (0645 151515). Probably Unhelpline would be a better description. I had some sympathy for the person on the other end of the phone as he said they had yet to receive details and that there would be a press campaign in the next few monthas. He added that I would have to wait and then apply and I should expect a delay anyway."

In fact, the Government has still not decided how to contact the 1,200,000 men aged 60 to 64 who will qualify nor the 300,000 older women and men who did not get retirement pension before but now qualify for the winter fuel payment. ‘Watch for the adverts’ is all I can advise at this stage. Saga Magazine will carry the details as soon as they are available.

Bill writes from Scotland that he has been discriminated against at the age of 51.

"In July 1992, a month before my 51^st birthday I joined a major Scottish company on a full-time contract. I was told that I would NOT qualify for the company pension scheme or company sick pay entitlement as I was over 50 years of age and that the company rules were that all staff had to retire at 60 years of age…I would like to know if companies can discriminate against older workers in this way?"

Yes, Bill, they can. Discrimination on grounds of age is not illegal. Discrimination on grounds of sex usually is. And sometimes that can be extended to other things. For example, discrimination against part-time workers does count as indirect sex discrimination because more women than men work part-time. But unless you can show that there is a real sex issue in the rules about over 50-year-olds then it is not unlawful at the present time. It would be unlawful if there were different ages specified for men and women, or for full and part-timers. But as long as these rules apply to all employees at the same age then they are not unlawful. That does not mean of course it is not unfair, wrong-headed, and bad employment practice. The Government says is trying to stamp out such prejudice. But until it decides to outlaw such practices, pious exhortations will do little to give comfort or redress to people in your position.

Finally, I have been taken to task by several policemen for comments I made about public service pensions being better than those in the private sector – and saying they were paid out of the public purse. Keith e-mailed me from Manchester.

"Paul Lewis has revealed his personal opinion and obvious dislike of public sector pensions and has made specific reference to police offices, doctors, nurses, teachers. He states that these professions have their pensions paid from the public purse and our readers who may not know the facts may be forgiven for thinking that these pensions are paid for in whole from the public purse. As a retired police officer I take offence at Paul Lewis’s statement because…police officers pay substantial contributions into their pension scheme."

They do indeed Keith. But I plead not guilty to prejudice against public service pensions and in particular to policemen. I just wish everyone had the chance to pay only – yes only – 11% of their salary and get a guaranteed, inflation-proofed pension at 55 as police officers do. The problem is the pension is so good that it cannot be met out of the contributions which serving police officers pay. It has to be supplemented from the annual grant which is given to each police force by the Home Office to fight crime. There have been numerous complaints from Chief Constables and at least two Parliamentary debates in the last year about the cost of police pensions. In Humberside the cost of police pensions is growing by £1 million year. In Gloucestershire, one pound in every five given to fight crime goes on police pensions. All public service pensions are guaranteed by taxpayers’ money, and much of the police pension is paid from it. I do not say that is wrong. But it is a better deal than most hard-working people get.

April 2000

e-mail Paul Lewis on paul@paullewis.co.uk