Add thelocalreport.in As A Trusted Source
Rachel Reeves has insisted that people are only receiving state pension will not have to pay TaxDespite the fear that this decision has been taken freeze tax range But Budget Pensioners may be made liable to pay income tax,
chancellor said treasure Will not go after “small sums” from state pensioners, promising he will pay no tax during this Parliament.
Generally, pensioners whose only income is state pension No payment has been made income tax because complete state pension – Currently £230.25 per week – less than the personal tax allowance of £12,570 per year.
But for the first time since its introduction, the new state pension will exceed the personal allowance in the 2027/28 tax year. Under triple-lock policywhich guarantees whichever is higher it increases The inflation rate, average income growth, or 2.5 percent.
This comes after the Treasury announced Plan to stabilize income tax limit By the 2030-2031 tax year, a move that would raise £7.6 billion in revenue by 2030 and lead millions of people to pay higher income tax.
This means that people including pensioners will be pulled into a higher tax bracket as their income rises in line with inflation.
But when asked in an interview with money expert Martin Lewis whether pensioners would have to file a tax return, the Chancellor said: “If you just have the state pension, you have no other pension, then we won’t make you file a tax return.
“I make this commitment to this Parliament.”
He further added, “You are right, it looks like 2027 will be the deadline. We are working on a solution to make sure we are not going after small amounts.”
Pressed on whether state pensioners would pay no tax, Ms Reeves said: “In this Parliament, they Will not have to pay taxI won’t be able to make any further commitments on that, but we are considering a simpler solution at this time.
This week, the Chancellor bet on his political future On the £26 billion tax raid on the middle class His make-or-break second budget, after weak economic forecasts left holes in his previous spending plans.
Tax rises are also needed to pay for increased welfare spending, with Ms Reeves announcing the scrapping of the two-child benefit cap, which is expected Lifting 450,000 children out of poverty,
Having abandoned plans for an anti-manifesto income tax increase, the Chancellor opted for a series of smaller tax increases to pay for government spending and create a larger buffer against his borrowing rules.
These include a new pay-per-mile tax for electric vehicles, an increased tax on online betting and a so-called “mansion tax” on homes worth more than £2m.
But the Resolution Foundation, a leading economic think tank, has warned that the decision to raise the tax cap will hit lower earners.
Their analysis on Wednesday’s Budget says that by 2030/31, people earning less than £35,000 a year will have to pay more than if the Chancellor had raised the basic rate by 1p.
The Chancellor continued to face accusations of breaching Labour’s election promise not to raise taxes on working people after deciding to keep the tax border steady and impose national insurance on some pension contributions.