On page 35 of last year’s Red Book, the Budget indicated that pensioners would continue to see a rise in allowances in keeping with the RPI and that this ‘promise’ would hold firm until the end of the current Parliament. However, in his 2012 Budget of last month, Mr. Osborne froze those tax free allowances for pensioners even though they had been assured they would keep up with the retail price index.
This year there will be a rise in allowance for those between the ages of 65 and 74 from £9,940 to £10,500 but unfortunately, there will be no more rises as had been promised through the coming years of this Parliament. Those pensioners over the age of 75 will see an increase to £10,660 which is up from £10,090.
If increases in allowances would have increased as planned, next year would have seen a rise of approximately 2.5% because of inflation falling to that level. The amount of taxes pensioners would have saved annually would have averaged to approximately £52.20 per year if their earnings had been enough to take advantage of the allowance.
Added to these changes, those pensioners who will not reach 65 or 75 years of age respectively by 1 April next year will not qualify for the allowances. These ‘scrapped allowances’ will yield approximately £3.3 billion in revenue during the next four years, and it is estimated that 5.5 million pensioners will be affected.
Any pensioner with income greater than £25,400 will realise a gradual decrease in allowances until it reaches the actual personal £8,105 personal allowance. These changes take effect Friday 6 April and were uncovered by research conducted by the National Pensioners Convention. As a result, they are launching a petition online aimed at getting Government to restore the age related RPI link to allowances.
