The Salary Stakes

What do you earn? And how does that compare with other people? New figures from National Statistics show that in April 2004 the mid-point of earnings in the UK was £22,000 a year. In other words, half the population earned more than that and half earned less. Already you are curious! If you are a lot better or worse than that are you in the top quarter, or even in the top tenth - in other words 90 per cent of the people in work earn less than you do. The chart shows the awful truth. To be in the 10 per cent of earners you need to have a salary of more than £43,000 a year. On the other hand if your annual pay is less than £12,000 then you are in the bottom tenth. If you are paid the minimum wage for 40 hours a week, you get slightly less than that, around £10,000 a year. If you live on the state pension credit - £105 per week – your income is around about half what you would earn on the minimum wage. And if you live on the basic state pension - £79.60 – it is lower still.

These earnings figures are for people in full time work who have not lost pay for time off and are combined for men and women. Despite thirty five years of equal pay laws men still earn more than women do. The mid point for men is £24,088 whereas for women it is £18,666. People in London earn a lot more than people elsewhere in the UK – around £10,000 a year more than people in the north east of England. And wages vary by age – peak decades for earning are our thirties and forties.

£4mn holiday
Last month we revealed a holiday for billionaires costing £30,000. Pshaw and piffle! Just days after that piece was printed an exclusive hotel was reported to be offering a holiday costing – wait for it – more than £4 million for just three days. And nowhere more exotic than Mexico! The Marquis los Cabos hotel in Baja is used to celebrities. Its top suite – the Presidential – is a snip at £1650 a night including tips and taxes. But for this exclusive break the hotel will fly you there and back in a private jet from anywhere in the world, fill the cellar with your own choice of vintage wine and fine Scotch malts, and hire a Michelin-starred chef to prepare the meals you want. Apart from the use of a private yacht while there, a round of golf with Jack Niklaus on the golf course he designed is a possibility and the price includes a bedside serenade by renowned guitarist Santana, though the hotel claims that for the price it can get anyone you wanted – including Sir Elton John. With the right notice.

Forgotten fifties
Is the Government forgetting about people in their fifties who are out of work and have no dependent children? A recent report by the Joseph Rowntree Foundation suggests it is. While the number of children and people over 60 in poverty has been reduced over the last eight years, there are 300,000 more childless adults under 60 in poverty than there were in 1997.

The Government has spent billions of pounds raising the living standards of older people and children. But nothing extra has gone to fifty somethings who are looking for work. The reason is that pension credit paid to those over 60 is increased each year in line with earnings. It will go up by 3.8 per cent in April. But means-tested benefits for younger adults go up with a special measure of inflation called the Rossi index (named after Sir Hugh Rossi who was a social security minister in the 1980s). It takes the standard retail prices index and excludes all housing costs. This year it rose by just 1 per cent compared to 3.1 per cent for the main retail prices index.

The result is that in April the guaranteed income from pension credit for someone aged 60 or more will rise by £4 to £109.45 a week. But someone just the wrong side of the big six oh who is looking for work will only get an extra 55p a week, raising their weekly money to just £56.20, or £8 a day. Most retired folk tell me that £109.45 is little enough to live on - it is the official ‘poverty line’ for pensioners. So how can someone just a few months younger aged 59 be expected to live on barely half as much? The Government won’t say. But Rowntree suggests that many of them move to benefits for long-term sick and disabled people, which are higher and go up in line with prices each year. Who can blame them?

Revenue refunds
The Inland Revenue is having another go at giving back £300 million in tax to four million people – about one and a half million of them pensioners – who should not have had it deducted in the first place. It first launched its Taxback campaign in November 2000. But four years later it still says it owes the same number of people the same amount of money. The people concerned have a low income and should pay no tax at all. But by law any interest earned on savings in a bank or building society has 20p in the pound deducted automatically. It has to be claimed back and many people never bother to do so.

Many people wondered why the tax could not be returned automatically. After all the Inland Revenue knows how much our income is and how old we are. So really it should be able to identify the people it has taken money off who should not pay tax at all. Last year the Revenue seemed to take some notice and launched a pensioner Tax Back Project. It identified 130,000 older people who may have been overtaxed and wrote to them. As a result 71,000 were repaid more than £7 million – around £100 each.

But that is a long way short of the £300 million it should have returned. So the Inland Revenue has relaunched its Taxback campaign. Anyone with a low income who has any money in a bank or building society should contact the Taxback Helpline on 0845 077 6543 to get the tax back. And if they also call the Taxback Registration Helpline on 0845 980 0645 they can make sure tax is not wrongly deducted in future.

People with joint accounts where one is a taxpayer and one is not can claim back half the tax wrongly deducted. For more details of who is eligible see Saga Magazine September 2004.

Find out more: www.claimyourtaxback.com and www.inlandrevenue.gov.uk/taxback/intro.htm

Fifty pounds spins away
The Chancellor was very clear when he told Parliament on 2 December "I can also announce that next year, at a cost of an additional £260 million, for those over 70 we will add to the Winter Fuel Payment with an additional £50 payment." MPs cheered. And most newspapers promptly took it up as an ‘extra’ £50 for the over 70s. Some even called it a pre-election bribe. But as anyone over 70 will know, this year they received more – an extra £100 on top of the winter fuel payment, boosting the payment to £300 for the over 70s and £400 for those over 80. The ‘additional’ £50 replaces that £100. So this coming December people over 70 will actually get £50 less than they got last winter. Somehow that was transformed by the Chancellor, helped by most of the press, into an ‘extra’ £50. Some spin!

February 2005

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