Healey to shield low-income pensioners from income tax in the Budget
Changes are needed to prevent the full, flat-rate state pension becoming liable for income tax after it rises in April.
Healey to shield low-income pensioners from income tax in the Budget
Pensioners on low incomes will be protected from income tax by Chancellor John Healey in his first Budget on Wednesday.
The full, flat-rate state pension is set to rise by 3.9% to £13,036.40 a year from April. That would push the payment above the £12,570 personal tax allowance and, unless changes are made, make it liable for income tax.
The government had already promised not to tax people whose only income comes from the state pension. Healey will say this commitment will be honoured through plans for a new tax allowance for low-income pensioners.
Healey's plans come as the Conservatives and Reform UK set out their own Budget alternatives, including major cuts to the welfare bill.
The chancellor's allies say his pensioner plans will spare them the administrative hassle of having to pay a small amount of tax.
The Budget is due to be printed this evening, with Healey's speech likely to be adjusted right up until he delivers it on Wednesday lunchtime.
Treasury sources admit it will not feature the scale of tax and spending measures seen under Labour and Conservative governments in recent years.
The Tories are urging the chancellor to cut green taxes, red tape and benefits to reduce energy bills.
Reform is proposing that the chancellor adopt 60 policies it says would create jobs - including backing the controversial Rosebank oil field - a project Healey is understood to support.
Liberal Democrat Treasury spokeswoman Daisy Cooper has called on the government to agree a new growth and defence partnership with the EU, including joining the single market. She said this would help "ease the huge tax burden weighing people down".
The Green Party has urged Healey to use his first Budget to "make the UK affordable", including by funding energy bill support through the removal of a tax relief for data centres.
Senior Green politicians, including leader Zack Polanski, MPs and peers, set out their proposals in a letter to Healey.