People aged 55 and over will pay tax 'they don't even owe' under Labour

Financial experts are warning the new Labour Party government - which rose to power last week - could make UK households pay tax they DON'T EVEN OWE. Labour Party Prime Minister Sir Keir Starmer and Chancellor Rachel Reeves have come under fire today (Monday, July 8).

Tom Selby, director of public policy at AJ Bell, said savers had to claim back almost £200million in overpaid tax in the last tax year alone, after being “clobbered” with a needless tax bill. He warned: “Depressingly, the true over-taxation number will likely be substantially higher.”

Starmer and Reeves must act to stop more getting caught by HMRC's "faulty systems", Selby said. “The new government needs to urgently review this approach and deliver a solution that taxes withdrawals correctly," he added today.

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“It is simply unacceptable that the government has failed to adapt the tax system to cope with the fact Brits can access their pensions flexibly from 55." he said. “Instead, it is persisting with an arcane approach that hits people with an unfair tax bill, often running into thousands of pounds.”

He was speaking as Ms Reeves delivered her first speech as Chancellor after becoming the UK's first female Chancellor in history on Friday. In response, a Tory spokesperson said: "Rachel Reeves herself said you don’t need to win an election to find out the state of the public finances, admitting that with the OBR, there is already detailed public scrutiny of the country’s finances.

"We warned that Labour would attempt this ruse as a cause to raid pensions and raise taxes. It is now clear that is coming to pass, and the British people will pay the price." Tom Clark from Prospect said: "Before election Reeves said in a world where OBR produced tax & borrowing numbers she couldn’t “open the books” & pretend to find they were worse than feared

"But OBR’s work on spending is circumscribed. HMT officials will now review this & duly find outlook “worse than feared”."