Chancellor John Healey has defended his ‘focus on pensioners’ as the reason he refused to hand a tax break to working age people in the Budget this week.
The Labour Chancellor, delivering his first Budget under Andy Burnham since Rachel Reeves and Sir Keir Starmer were ousted as Chancellor and Prime Minister respectively, has handed a big tax break to state pensioners.
The Pension Tax Allowance will give all state pensioners, regardless of age and income source, a tax-free allowance boost, increasing the amount they can earn to £13,037 tax-free, or £13,319 with a tax reduction.
Working age people who have not yet hit state pension age, meanwhile, will not be allowed any tax free allowance increase and in fact will be hit by ‘the largest tax increase in recent history’ as they battle frozen thresholds still stuck at £12,570.
Money expert Martin Lewis, quizzing the Chancellor on Thursday night’s The Martin Lewis Money Show Live, asked Mr Healey why he didn’t simply raise tax-free allowance across the board, rather than make a specific exemption just for state pensioners.
Pitching a reader’s question, Martin asked the Chancellor: “Surely it would have been more beneficial and easier to implement just increasing the Personal Allowance to £13,037 for everyone especially as this was meant to be a Budget for working people.
“So you’re giving the increase to people on the state pension but you’re not giving it to people of working age.”
Mr Healey replied: “So no chancellor can do everything they want to do in a Budget. My focus was on pensioners who have the basic state pension and focus on them so what I’m doing is to make sure that in this Parliament they’re not going to get pulled into and above the income tax threshold.
“So nearly 300,000 won’t pay any tax at all, others will benefit from the tapering arrangements.”
Earlier on, Martin Lewis had sked the Chancellor: “Forgive me, you said in your speech yesterday ‘we are not raising taxes on working people. But this fiscal drag, the freezing of the tax thresholds, is the biggest tax that has ever been raised in recent history.”
The Martin Lewis Money Show Live, Thursday October 29 episode is still available to watch on ITVX.
