Fake or Fact: Is Labour going to hit pensioners with tax burden?
Andrew Eborn answers common misconceptions and disinformation
GB News
GB News members can enjoy an extended version of Andrew Eborn's "Fake or Fact” feature, and this week, he is discussing whether or not Labour is going to hit pensioners with a tax burden.
The state pension is a lifeline for millions, providing essential financial support during retirement.
Currently, individuals in the UK can access this benefit once they reach the state pension age of 66, though this age is set to rise for those born after April 1960.
The full new state pension stands at £221.20 per week, totalling £11,502.40 annually, while the full basic state pension equates to £8,814 per year.
With potential changes on the horizon, understanding the state pension is more crucial than ever.
The triple lock: A pensioner's best friend?
The "triple lock" is designed to protect pensioners' incomes by ensuring the state pension rises annually by the highest of three measures:
- Average earnings growth
- The percentage growth in prices measured by the Consumer Prices Index (CPI)
- 2.5 per cent.
The UK is buzzing with concerns about a possible "retirement tax" looming on the horizon. Andrew Eborn examines the claim
PA
This safeguard is intended to shield pensioners from inflation and maintain their purchasing power.
Both the Conservatives and Labour pledged to protect the triple lock in their 2024 General Election manifestos.
But could changes be coming that might alter this essential policy?
Will Labour hit pensioners with a tax hike? The truth...
The UK is buzzing with concerns about a possible "retirement tax" looming on the horizon.
As the state pension is projected to rise to £12,578 by 2027-28, it could surpass the current tax-free personal allowance of £12,570, potentially subjecting pensioners to income tax for the first time.
Despite accusations that Labour will hit pensioners with a tax hike, the personal allowance was frozen for four years by Conservative Party leader Rishi Sunak during his time as Chancellor. This freeze was extended to six years - until 2028 - by Jeremy Hunt when he was Chancellor.
Some pensioners are already being taxed on their state pension, with more set to pay the tax as the state pension rises in coming years, but the personal allowance does not.
This is a tax-raising measure known as fiscal drag because it drags people into the next tax bracket.
Ahead of the General Election, the Conservative Party had proposed a "triple lock plus" policy, aiming to increase the personal allowance for pensioners to £13,710 by 2027-28 which would have protected around 750,000 pensioners from new tax burdens.
Labour has not, however, committed to this policy, sparking fears that more pensioners could face unexpected taxes.
MORE FROM GBN MEMBERSHIP:
Rishi Sunak froze the personal allowance for four years, with Jeremy Hunt subsequently extending the freeze by two additional years
PA
Frozen tax thresholds: The hidden cost
The issue isn't just about pensions; frozen tax thresholds are hitting everyone's wallets. If you're earning £30,000 in England, Wales or Northern Ireland, and get a four per cent annual pay rise, you could be looking at an extra £620 in taxes by 2028. Tax bands and rates are different for people living in Scotland.
Even basic-rate taxpayers are expected to see a net increase of £490 annually due to the freeze.
As the state pension potentially climbs to nearly £13,250 by 2030 under the triple lock, more pensioners might find themselves unexpectedly paying taxes if Labour doesn't implement protective measures.
For more details, visit UK Government's state pension page.
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