Skip to main content

Pensioner Tax Allowances

Volume 550: debated on Tuesday 11 September 2012

The impacts of the reforms to age-related allowances were set out alongside Budget 2012. Half of those over the age of 65 pay no income tax, and nobody will pay more tax in 2013-14 than in 2012-13 as a result of these changes. The Government remain committed to supporting pensioners and have introduced the triple guarantee for the basic state pension, ensuring that it will increase each and every year by the highest of earnings, prices or 2.5%.

Will the Minister explain to my constituents why people with small occupational pensions are paying more while millionaires are paying less in tax?

The right hon. Gentleman will be aware that the policy announcements in the last Budget resulted in millionaires paying more in tax, not less. As far as this Government’s record on pensioners is concerned, let us not forget that the state pension is going up by £120 more compared with the Opposition party’s plans.

For a long time, some pensioners, by virtue of having their personal allowance clawed back, have found themselves paying an effective rate of income tax far higher than many working people on a similar income. Will the Government’s policy of raising the personal allowance mean that that unfairness is eventually brought to an end?

I am pleased to say that my hon. Friend is right. Our policy will reduce complexity in the tax system and reduce the need for high marginal rates for pensioners through the taper system.