Apparently (didn't hear it myself) there was a woman on to "Joe" claiming that, due to the changes, pensioners are being discriminated against because their 20% tax band and tax credits are being reduced unfairly
This is totally untrue and merely shows a lack of understanding in the tax system
eg - married couple with State pension of €10K each and other pension of €50K
At the moment, without the adjustment, their PAYE is
€50,000 x 20% = €10,000 minus tax credits of €6,600 = PAYE paid of €3,400
Total take home income = €66,600 (€70K less tax of €3,400)
The correct PAYE payable should be
€65,600 @ 20% = €13,120
€4,400 @ 41% = €1,804
Total = €14,924
less Tax Credits of €6,600
Total PAYE payable = €8,324
Total take home income = €61,676
However, unless Revenue start taxing State Pension at source, the only way to ensure that people pay the correct tax is to adjust their PAYE cut-offs & credits
So by reducing their cut-off by the amount of State Pension received, the correct PAYE is paid on the non-State pension
eg -
reduce 20% band by the €20,000 State pension received
reduce tax credits by 20% of the amount of State Pension
Now non-State pension =
€45,600 @ 20 = €9,120
Balance @ 41% = €1,804
Total = €10,924
less Tax Credits = €6,600 less €4,000 (€20K @ 20%) = €2,600
Total PAYE payable = €8,324
Total take home pay = €61,676 which is the same as the correct amount calculated above