Chancellor Healey to protect low-income pensioners from income tax in upcoming Budget

Chancellor John Healey will protect low-income pensioners from income tax in his first Budget on Wednesday.

Pension Tax Plans

The full flat-rate state pension is expected to rise by 3.9 percent to 13,036 pounds and 40 pence a year starting in April. Without changes, this increase would push the payment past the 12,570 pound personal tax allowance and make it subject to income tax. The government previously promised not to tax people whose only income comes from the state pension. Healey will use plans for a new tax allowance for low-income pensioners to fulfill this promise. Allies of the chancellor say this will save pensioners from dealing with administrative work just to pay a small tax amount. The Treasury has not yet confirmed specific details like the total number of pensioners who will be affected.

Opposition Proposals

Meanwhile, the Conservatives and Reform UK have released their own alternative Budget proposals. The Conservatives want the chancellor to cut green taxes, red tape, and benefits to lower energy bills. Reform UK suggests 60 policies to create jobs, such as approving the Rosebank oil field, a project Healey is understood to support. Liberal Democrat Treasury spokeswoman Daisy Cooper wants the government to form a new growth and defence partnership with the European Union, which includes joining the single market. The Green Party sent a letter to Healey urging him to make the UK affordable by ending tax relief for data centres to pay for energy bill support. Signatories of this letter include Green leader Zack Polanski, along with other MPs and peers.

Budget Expectations

Treasury sources note that this Budget will not feature the large tax and spending announcements made by past Labour and Conservative governments. The Budget document is set to be printed this evening, and Healey will likely fine-tune his speech right up until Wednesday lunchtime.

Context

Chancellor's Budgets outline the government's tax and spending plans for the upcoming year and often spark major debates among political parties. Debates over state pensions and tax thresholds frequently center on how to balance government revenue with support for older citizens on fixed incomes.