e-mail Paul Lewis on paul@paullewis.co.ukDear George (if I may)
I know opposition is different from government and it is Coalition not Conservative and the financial mess you inherited etc etc. But, as you prepare for your first spring Budget on 23 March, I thought I would just ask you to do a couple of key things which you promised me two years ago when you were Shadow Chancellor (Saga March 2009).
Scrap basic and lower rate tax on savings interest. With interest rates at historic lows the return on savings – which is the income many over-50s rely on – is negligible. To protect them a little your boss, now Prime Minister, said that basic and lower rate tax would be scrapped on savings interest. Repeating that commitment you told Saga “government has a role to protect innocent victims [of low interest rates], savers in particular.” The present system has seen HMRC wrongly collect more than £200 million tax from savings interest earned by non-taxpayers (I know non-taxpayers can stop it by filling in form R85 and reclaim it with R40 www.hmrc.gov.uk/taxback but lots don’t). So please scrap the tax.
Raise the tax threshold for over 65s by £1000. In opposition you promised a £2000 rise. But we would settle for the £1000 extra income before tax is due which you are giving to under 65s from April. Saga readers cannot understand why the under 65s will get a £1000 boost but the over 65 allowances will rise by just £450. Of course Saga would like the full £2000 promised in opposition. But see above re coalition, financial mess etc. So we will settle for £1000. And while you are at it, equalise the over 65 and over 75 allowances – perhaps at £10,600. Having two similar rates is daft.
Scrap the means-test on the over 65s allowance. I asked you to do this in March 2009 and, it is true, you refused. “We will continue to taper away the allowance…for reasons of affordability and the state of the public finances.” But lots of Saga readers send me emails like this “It makes my blood boil (writes John)…why reduce it because we are paid in excess of an arbitrary figure? What is the reasoning behind this?” As you know once income reaches £24,000 (in 2011/12) the higher age allowance is tapered away until it reaches the allowance give to those under 65. This means test should go. Please look at it again.
Small pension pots Many people have small pension pots – sometimes several. But unless their total non-state pension provision is worth less than £18,000 (which is a pension of less than £900 a year) they have to try to convert the pot into a tiny and often poor value pension. So let people take all individual small pension pots below, say, £10,000 as a lumpsum with a quarter tax-free and the rest taxed at their marginal rate (and not added to that year’s income so often could be tax-free).
Come on George (if I still may). These four won’t cost much. And it would make one of the biggest voting communities very, very happy.
Yours sincerely
Paul
e-mail Paul Lewis on paul@paullewis.co.uk