Pensioners to be clobbered with new 53% tax bombshell hidden in Budget
Hundreds of thousands of pensioners face being clobbered with a punishing 53% tax rate, it has emerged. The details were buried inside documents released after John Healey’s Budget, triggering mounting anger.
TL;DR
- A new Pension Tax Allowance scheme in the Budget may result in a 53% tax rate for up to 200,000 low-income pensioners.
- The 'bizarre' tax rate emerges for pensioners with incomes between £13,037 and £13,319, where private pension income above the new state pension is taxed at an effective 53%.
- This complexity is a consequence of the state pension rising above the tax-free allowance, leading to a taper mechanism.
- Critics like Steve Webb and Robert Jenrick have condemned the scheme for its complexity and its impact on modest incomes, advocating for simpler solutions and broader tax cuts.
- The Treasury states the Pension Tax Allowance aims to prevent administrative burdens for pensioners with incomes up to the full new state pension.
- There is ongoing anger and campaigning against potential changes to the Triple Lock pledge for state pensions, with protests and petitions occurring.
- The government plans to potentially move away from the Triple Lock after 2030, retaining inflation and 2.5% increases, with a link to long-term earnings growth.