Rishi Sunak pledges £2.4bn tax cut for pensioners with 'triple lock plus'
Rishi Sunak pledges £2.4bn tax cut for pensioners with 'triple lock plus'
PA
Pensioners could be given a tax break worth £2.4billion a year if the Tories win the General Election on July 4.
Rishi Sunak is expected to announce the tax cut today as he continues his election campaign.
The tax cut would mean that from April next year the income tax personal allowance for pensioners will be increased in line with the triple lock.
The pledge would mean both the state pension and pensioners’ tax-free allowance will always rise in line with the highest of earnings, wages or 2.5 per cent.
Labelled the “triple lock plus”, the policy is estimated to cost £2.4bn a year by 2029/30.
This price tag mirrors Mr Sunak’s proposed national service duty for all 18-year-olds, billed at £2.5bn a year.
The income tax personal allowance for pensioners could be increased in line with the triple lock next year
GETTYSunak aims to use the extra money found from the reform of tax avoidance and evasion. The plans aim to raise £6bn a year by the end of the next parliament.
For individual pensioners, it would be worth around £100 in 2025 according to the Tories, and would grow over time, adding to their incomes on top of rises in the state pension.
The policy follows criticism of Chancellor Jeremy Hunt’s decision to cut national insurance by 2p at the spring budget, after a similar cut in the autumn.
State pensioners did not benefit from the cut, as they do not pay national insurance.
While Mr Sunak said the Tories were committed to the triple lock, he claimed Labour would by contrast drag pensioners in receipt of the full state pension “into income tax for the first time in history”.
The Prime Minister said: “I passionately believe that those who have worked hard all their lives should have peace of mind and security in retirement. Thanks to the Conservatives’ triple lock, pensions have risen by £900 this year and now we will cut their taxes by around £100 next year.
“This bold action demonstrates we are on the side of pensioners. The alternative is Labour dragging everyone in receipt of the full state pension into income tax for the first time in history.”
Rishi Sunak’s proposed tax break for pensioners is “simply a reversal of a tax increase that the Conservatives proposed”, the Institute for Fiscal Studies director Paul Johnson said.
Mr Johnson told BBC Radio 4’s Today programme: “Pensioners used to have a bigger personal allowance than people of working age – it was the Conservatives who got rid of it.
“So this is one of many examples actually of tax policy that has been reversed by the same Government. George Osborne got rid of it in the 2010s when the personal allowance of people under pension age continued to rise.
“So one of the consequences of that, actually, is that the point at which pensioners currently start to pay tax is below where it was in 2010, whereas the point at which the rest of us start to pay tax is well above where it was in 2010.
“Secondly, it’s worth saying that in part, looking forward, this is simply a reversal of a tax increase that the Conservatives proposed. The idea is that the allowance doesn’t rise at all in line with inflation for the next three years. So half of the cost of this is simply not imposing the tax increase that was previously proposed.”
Asked if it makes fiscal sense, he replied: “The overall cost is about two and a half billion a year by the end of the Parliament, that’s not a very big number, but of course, these promises are beginning to add up.
Labour claimed the Tories’ offer to pensioners was not credible.
Jonathan Ashworth, the shadow paymaster general said: "Why would anyone believe the Tories and Rishi Sunak on tax after they left the country with the highest tax burden in 70 years? This is just another desperate move from a chaotic Tory Party torching any remaining facade of its claims to economic credibility.
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“Not only have they promised to spend tens of billions of pounds since this campaign began, they also have a completely unfunded £46bn policy to scrap national insurance that threatens the very basis of the state pension.
"Labour will protect the triple lock. But Rishi Sunak is planning to reward Britain’s pensioners for their loyalty by stabbing them in the back, just like he did to Boris Johnson and just like he has done to his own MPs.”
He added: "Day after day, they are splurging out desperate commitments with no explanation where the money is coming from, no explanation how they will fund these commitments. This is chaos."