Inflation hits pensioners and the poor hardest

Rising inflationPeople on lower incomes, including pensioners, have been hardest hit by inflation over the past 10 years. An Institute of Fiscal Studies (IFS) report has said that between 2008 and 2010 the poorest 20% of households suffered an average annual inflation rate of 4.3%. In contrast the rate of inflation suffered by the wealthiest 20% was just 2.7%. The reason for this disparity lies in the different goods and services that we buy. Although there are two main measures of inflation CPI (Consumer Price Index) and RPI (Retail Price Index) ...

Higher tax rate to affect 750,000 people

Average British households could be £200 a year worse off due to benefit cuts and tax changes. IFS research has revealed that thousands of people will have to start paying more tax this April. About 750,000 people will become higher-rate taxpayers in April due to the government tax shake up leaving them £200 a year worse off, according to the Institute of Fiscal Studies (IFS). The new system means that three quarters of a million Britons will have to begin paying the higher 40% income tax rate on their earnings from 5 April when the eligibility threshold falls from £37,400 to £35,001. At the same time the level at which people start to pay tax will rise from £1000 to £7,475 a year. Both measures were designed to remove thousands of lower paid workers from the tax system.