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Volume 949: debated on Tuesday 2 May 1978

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asked the Chancellor of the Exchequer for what reason people in receipt of index-linked Post Office retirement pensions have been required from 5th April to pay higher rates of tax on a pension increase which does not come into force until November; to what other categories of occupational pensioners this applies; what is the estimated number of people affected; what is the average amount of extra tax per week involved; and whether he will make a statement.

, pursuant to his reply [Official Report, 24th April 1978; Vol. 948, c. 462], gave the following information:

Since no tax adjustments have yet been made in respect of the increase in national insurance pensions payable in November 1978, I assume that my hon. Friend is referring to the increase payable from November 1977. This increase became liable to tax only from 6th April 1978, and, since in the case of occupational pensioners the tax on both pensions is recovered through the PAYE deductions from the occupational pension, the deductions may accordingly be increased from that date. About 2 million State pensioners receive also an occupational pension or some other source of income which is subject to PAYE deductions. For a married couple the average amount of extra tax payable on account of the pension increase is about 75p a week, but this will be reduced next month when the increase in personal allowances announced in the Budget Statement is taken into account in the PAYE deductions.