6 March 2024

Budget 2024: 2% Cut in National Insurance…but tax on pensions will rise in April

The Chancellor delivered his Spring Budget today announcing that National Insurance contributions will reduce by a further 2% for those in work, whilst the tax burden on pensioners will actually increase from April when the planned pension increases take effect.

No mention was made today of the personal tax thresholds. The basic tax threshold of £12,570 at which 20% tax begins, has not increased since April 2021, and will remain frozen until 2028, meaning that as pensions rise in April the amount of tax taken will increase. A Civil Service pensioner on an average £10,000 annual pension and in receipt of the basic State Pension of £8,122 a year, will pay £360 more tax from April than if the thresholds had risen in line with CPI inflation to £14,300.

Civil Service pensions will rise by 6.7% from 8 April; and State Pensions will rise by 8.5% from 9 April, but more of those increases will be subject to tax as more and more of the pension income will be above the frozen £12,570 threshold.

The number of over 65`s paying income tax will rise by 800,000 from April to over 9 million pensioners from April when the pension increases take effect, according to pension analysts Lane, Clark & Peacock (LCP).

CSPA General Secretary Sally Tsoukaris said today: “It is disappointing that the Chancellor `s statement made no mention of personal tax thresholds and the growing tax burden on pensioners after a life-time of work.

“The Chancellor announced plans for digitisation of the NHS records and systems to help reduce waiting lists but it is not clear how this will impact the millions of pensioners who are digitally excluded and rely on letters and phone calls for appointments. We were also disappointed that there was no mention of spending plans to address the crisis in Social Care. We will continue to campaign for the issues that matter to our members: fair pensions; comprehensive social care; measures to address digital exclusion; and improved and accessible public transport”


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