Budget brings bad news for pensioners

| March 21, 2012 | 0 Comments
Budget brings bad news for pensioners

Changes announced in today’s budget mean that four million pensioners will be worse off.

The budget included controversial proposals to lower the income tax allowance for people over 65 to £9,205 from April.

This will bring pensioners in line with the general population.

The over 65s currently benefit from a more generous tax-free allowance of £10,500, which will be frozen for existing pensioners.

The move will raise around £1 billion annually for the Government and will help to offset the increase in tax-free allowance from £8,105 to £9,205 for the under 65s.

The change has been called a ‘granny tax’ and has caused outrage among campaigners for the elderly.

Dr Ros Altmann, the Director-General of Saga said: ‘This is an outrageous assault on decent middle-class pensioners.

‘This Budget contains an enormous stealth tax for older people. Over the next five years, pensioners with an income of between £10,000 and £24,000 will be paying an extra £3 billion in tax while richer pensioners are left unaffected.

The termination of age-related personal allowances was recommended by the Office for Tax Simplification.

It will eliminate the need for 150,000 pensioners a year to fill out self-assessment tax returns as a result of the separate allowances.

The Chancellor also announced plans to scrap the second state pension, creating a single tier pension as part of a wider simplification of the tax system.

The means-tested second state pension is considered too complex.

The single tier pension, which will be contributions based, is expected to be about £140 per week, while the current full basic state pension will increase from £102.15 to £107.45 a week from April.

The Chancellor also revealed that the state pension age will rise automatically in line with increased in longevity.

Tags: age-related personal allowance, , granny tax, income tax allowance, state pension age, stealth tax

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