Compensation for 10p rate cut "will take time"

24 April 2008
Alistair Darling has admitted that “it will take time” to compensate those affected by the government’s move to scrap the 10p rate of income tax.

The abolition of the 10p rate was part of Gordon Brown’s final budget as chancellor last year, and came into effect earlier this month.

The tax change has faced major opposition from both the Conservatives and Lib Dems, and from Labour backbenchers who forced the government to introduce a support package for those who are losing out as a result of the change.

Low-paid workers without children and pensioners under 65 have been stung by the move, and the chancellor said they will be compensated through the winter-fuel allowance system, tax credits and the minimum wage.

However, Darling told MPs he would wait until this autumn’s pre-Budget report to outline the support package as changes to the tax system “can be quite complex”.

The Conservatives have branded the affair “a complete shambles” and have called on the government to clarify how much of the compensation will be backdated to April.

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