Darling to unveil tax plans

Alistair Darling will be announcing the government’s plans on income tax compensation to the Commons later today.

The chancellor was forced into a U-turn on the issue last month when Labour rebel Frank Field mustered enough backbench support to threaten a government defeat on the issue.

Backing down over the abolition of the 10p starting rate of income tax, Mr Darling agreed to consider ways in which those losing out as a result of the change could be compensated in a letter to Treasury committee chairman John McFall on April 23rd.

Mr Darling said in the letter the Treasury’s focus would be on allowing the “average losses” from the removal of the 10p starting rate of income tax for low-paid families to be “offset”.

The government has been under pressure since then to assure backbenchers that compensation will be backdated to the start of the tax year.

This afternoon’s statement is expected to see the chancellor announce how these payments will be made.