Older people face big tax problems

23/10/2009

Britain's elderly are consistently overpaying their taxes, the National Audit Office (NAO) has revealed.

According to the organisation, around 1.5 million older people have overpaid an average of £171 each - a collective total of £250 million.

Errors from HM Revenue & Customs, the UK's tax authority, were revealed to have contributed to the unnecessary payments.

This is because officials can be confused by the multiple sources of income many pensioners can have.

Meanwhile, other overpayments occur because pensioners do not claim tax benefits that are due to them, including tax credits.

NAO suggested that overall incomes would be up to four per cent higher if all pensioners claimed correctly.

Amyas Morse, head of the organisation, said: "Older people want to pay the right amount of tax but too many pay more than they need to because they do not claim allowances to which they are entitled and because of errors."

Kevin Still, EuroDebt director, added: "It is important for pensioners to maximise their income and over paying tax is definitely a cause for concern. Many of EuroDebt's over 60 clients on Debt Management Plans (DMPs) haven't looked at reducing their energy prices and switching to cheaper tariffs. We are also concerned that many men over 60 do not claim for all their statutory benefits.

"Reports by the AA that car insurance premiums have risen annually by 14 per cent for fully comprehensive cover, or £100 a year on average, are also squeezing budgets along with the rising costs of actually running a car. Being loyal to your existing insurer doesn't seem to be the right answer, as shopping around has shown substantial savings for low risk drivers. EuroDebt now spends a lot more time on looking at ways of increasing disposable income when people start a managed debt solution like a DMP or an IVA."

Tags; Budgeting Advice, Retirement Money Problems,

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