Labour ministers have vowed to protect pensioners from a "granny tax" when the state pension rises above £13,000 next year. Shadow Chancellor Andrew Griffith warned that pensioners would face a significant administrative burden, stating, “Pensioners will spend their last years filling tax returns or on the phone to HMRC.” The state pension is expected to rise by 3.9% next year, according to new figures, pushing the annual state pension above £13,000.
Pensions Minister Torsten Bell assured that pensioners who only just exceed the personal allowance will not have the "administrative burden" of paying small amounts of tax this Parliament. "Pensioners who only just exceed the personal allowance will not have the administrative burden of paying small amounts of tax this Parliament," Bell said.
Chancellor John Healey is drawing up Budget plans to ensure pensioners are not punished when the state pension exceeds £13,000 next year. Healey is working to prevent the triple-lock from pushing the annual state pension above £13,000, which would trigger a tax liability. The current threshold for tax is £12,570.
The state pension is set to rise by nearly £500 a year, according to Channel4. This increase is part of a broader plan to protect pensioners from tax when the state pension exceeds £13,000 next year. However, pensioners with other money sources will still be required to pay tax.
Andrew Haldane, an economist and an ally of Andy Burnham, told LBC that money markets now suspect that this is a traditional tax-and-spend socialist government with better TikTok skills. Business Secretary Jonathan Reynolds initially refused to rule out retirees paying tax on the state pension next year, but Labour has since clarified its stance.
The Labour government's decision comes after a series of discussions and policy shifts aimed at protecting pensioners from the impact of rising state pensions. The measures are designed to ensure that pensioners do not face unexpected tax liabilities as their state pension increases.