The Trades Union Congress (TUC) has made a plea to the government for a rescue package to help low-paid workers who will be adversely affected by the new tax regime.
According to the organisation, millions of employees in the UK will have lost out as a result of the abolition of the 10p tax rate.
The decision to end the 10p starting rate of income tax was made by Gordon Brown in his last Budget as chancellor and came into effect earlier this month.
Speaking at the north-west TUC conference, Brendan Barber, general secretary of the organisation, stated: "Across the UK, people’s finances are being squeezed by rising food, energy and borrowing costs. And earlier this week, millions of low-paid workers were dealt a further blow by the abolition of the 10p tax rate."
He urged the Labour administration to compensate those affected using money funded by closing a tax loophole which allows wealthy individuals to split ownership of an asset with their spouse 12 months before selling it.