Downing Street Says » Pensioner Tax Allowance

» Thursday, March 22, 2012

Pensioner Tax Allowance

Asked whether the PM regretted the way the freeze on pensioners’ tax allowance became public, the PMS said that it was an announcement in Parliament and was clearly set out in the Red Book.

Asked whether the PM was happy that the pensioner tax allowance freeze had been called the ‘Granny Tax’, the PMS said that it was not a tax but a freezing of a tax allowance. The Chancellor set out the reasons for a change. The decision has been taken to freeze the age related allowances but the Triple Lock would ensure that state pensions would rise by CPI, or earnings or 2.5%, whichever was highest.

Asked whether the situation for pensioners would be better overall, the PMS said that the state pension would increase by 5.2% this year, which was a cash gain of 127 for 2012/13 when compared to the previous policy of uprating in line with earnings.

Asked whether the Government would be addressing the cost of social care for the elderly over the next year considering it was not discussed in the Budget, the PMS said the Government was planning to say something about social care in the coming months.

Asked whether tax paying pensioners will still be better off in real terms over the next 2-3 years, the PMS said that there would be no cash losers. Half of the population over the age of 65 do not pay tax, so the poorest pensioners would be unaffected. Looking over the coming years, pensioners would benefit more from the Triple Lock than the notional loss from the personal allowance freeze.

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