Today’s Budget was never going to rekindle the nation’s love for a Government that has put us through the equivalent of fiscal hell to get the economy out of the pandemic and financial chaos caused by Liz Truss’s disastrous tenure as Prime Minister. minister.
It was not to be, although Chancellor of the Exchequer Jeremy Hunt was in pretty good form when he outlined a path to lower taxes (about time too, I hear), while egging on the ‘two houses’ Angela Rayner, the leader deputy of the Labor Party.
However, I’m sure the nation’s mighty army of pensioners felt a little aggrieved at being left through the cracks of the Budget. In fact, the country’s nearly 13 million pensioners were barely mentioned in Mr. Hunt’s hour-long (and more) speech.
Instead, Hunt decided to focus on helping families and those with jobs. It’s an understandable tactic to some extent, but a dangerous one, given the propensity of many pensioners to vote blue rather than red.
Of course, beholden (strangely) to the Office for Budget Responsibility’s flawed number-crunchers (thank you, George Osborne), Mr Hunt was never going to be able to blow us all away with a fanfare of tax cuts that I’m sure would have delighted to have done it.
Jeremy Hunt presents his budget today and charts a path to tax cuts
But what it did offer – a further 2p cut in National Insurance (NI) contribution rates to add to the 2p reduction announced in last year’s Autumn Statement – was divisive and alienating.
By opting for cuts to the IN, rather than a reduction in income tax, he excluded pensioners receiving state pensions from his generosity. As pensioners have reminded me since November, when Hunt announced the first wave of NI reductions, those receiving the state pension pay no NI. But many of them – in fact more than ever due to Mr Hunt’s stealthy multi-billion pound tax raid – pay income tax.
Perhaps Mr Hunt will correct this “mistake” later this year if the Government, as widely reported, holds another “tax event” before the autumn election, paving the way for more inclusive income tax cuts.
But then, maybe I won’t; Some politicians and commentators are even suggesting an early election in May with the promise of reducing income tax rates enshrined in the Conservative Party manifesto.
It can be argued that pensioners have already received a very royal treatment from Mr Hunt. Next month, under the promise of the ‘triple lock’, the state pension will rise by a spectacular 8.5 per cent, to £11,501 a year, ahead of inflation which is currently around 4 per cent.
Only around half a million pensioners receive the “new” full state pension, while those who were entitled to it before 2016 get a lower “basic” offer.
Brilliant, yes, although let’s not get carried away. Only around half a million pensioners receive the “new” full state pension, while those who were entitled to it before 2016 get a lower “basic” offer.
Furthermore, let us not forget that it was the pensioners who had the guarantee of the triple blockade removed in 2022, after the pandemic.
However, by far the biggest scourge for pensioners is Mr Hunt’s freezing of the personal allowance at £12,570 until 2028. As pensioners’ incomes have risen above this amount, they have seen dragged (dragged) to pay income taxes. The number of pensioners paying income taxes is expected to reach a record 8.5 million this year, up from 4.5 million in 2010.
For many retirees, the financial outlook is tough, but it’s not all doom and gloom.
The silver lining is that inflation – as Mr Hunt said in his Budget speech – is falling below 2 per cent, reducing pressure on household finances. An extension of the fuel tax freeze for a further year will also help older drivers mitigate continued inflation-reducing increases in their insurance premiums.
In addition, there are measures that pensioners can take themselves to safeguard their finances and assets. These include regularly searching for services such as broadband, insurance, mobile phone contracts and the best savings deals. Too many pensioners remain loyal to companies that long ago stopped offering them good value for money. LOYALTY DOES NOT PAY.
Furthermore, too many low-income pensioners do not claim benefits that could help improve their household finances (for example, pension credits). Don’t be shy or embarrassed, check if you are eligible and claim it: https://www.gov.uk/pension-credit/eligibility
Finally, make sure that any cash savings or investments you have are fully protected from income tax and capital gains tax. That means protecting them within tax-free Individual Savings Accounts.
In the current tax year ending April 5, you can deposit a maximum of £20,000 into an Isa, and the same again on April 6 (£5,000 more if the new ‘British’ Isa is up and running in time). That money then grows tax-free and can subsequently be withdrawn without incurring taxes.
That Isa money will be protected from tax under this government and (hopefully) the next.
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