Personal allowance credits inconsistent and may be axed

Tynwald buildings, Douglas

Tynwald buildings, Douglas

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Treasury Minister Eddie Teare MHK has indicated he would support the abolition of personal allowance credits.

The credits were introduced in 2003 as a way of supporting those on low incomes. More than 9,500 people, a third of these pensioners, benefit from the payments of £500 for an individual and £1,000 for married couples or civil partners.

But they have proved controversial. In 2010, the rules were changed so that prisoners were no longer eligible for the payments.

And in the Keys this week, Peter Karran MHK (Lib Van, Onchan) suggested anyone with capital above a certain limit should not get the tax credit. He said it was ‘ridiculous’ that by arranging their financial affairs wealthy people could get the credit.

Mr Teare said that £4.76m was paid out in the credits in 2012-13 and the estimated figure for 2013-14 was £4.46m. He agreed the system had ‘certain inconsistencies’.

But he said it would be a mistake to create extra bureaucracy with a system that would cost more to administer than it was trying to save.

Kate Beecroft MHK (Lib Van, Douglas South) suggested it would be less bureaucratic simply to abolish the credits and transfer the money to the benefits system to make sure it would go to the vulnerable. ‘I would not disagree,’ Mr Teare replied.

He said Tynwald had given unanimous support to a taxation strategy that would remove benefits such as the personal allowance credits from the tax system. ‘This matter remains under active consideration,’ he said.

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