Throughout the year we will be sharing information on our campaign focus areas. Those topics we feel strongly about and are fighting for on behalf of our members.
This month we are discussing tax.
Personal income tax thresholds have been frozen since 2021 and are proposed to continue until 2028. This has created a stealth tax that disproportionately impacts pensioners. Many are being dragged into paying tax for the first time simply because
pensions have risen with inflation.
According to HM Revenue and Customs, over 1.2 million more pensioners are expected to pay income tax by 2027 as a result of fiscal drag. There is very little headroom from the top rate of the State Pension to the £12,570 basic income tax threshold. This will disproportionately impact those with smaller occupational pensions.
Based on the latest Office for Budget Responsibility forecasts for inflation, by the end of the tax band freeze the personal allowance would have increased to £16,385 had it been increased with inflation.
However, fiscal drag is already affecting millions more pensioners and is an unfair policy for those with a lifetime of work behind them.
We propose:
Indexation of thresholds with inflation to avoid unfair real-terms tax rises.
A raising of the basic income tax threshold based on the Bank of England’s inflation calculator
Protection of 25% tax-free lump sums to give retirees security when accessing their pension pots.
Protect ISAs and other tax-free saving platforms.
Later Life Ambitions
Later Life Ambitions brings together the collective voices of over a quarter of a million pensioners through the National Federation of Occupational Pensioners, the Civil Service Pensioners’ Alliance, and the National Association of Retired Police Officers Association.
We aim to encourage today’s decision makers to confront the challenges of tomorrow.
What we're calling for:
This Budget presents our plan for a fairer, more sustainable deal for older people. we urge you to stand with us and add your voice to our calls for a fair deal for living well in later life.
- Protecting the State Pension
- Reducing the tax on pensions
- Tackling the gender pension gap
- Supporting older people in the workplace
- A minimum income guarantee
- Widening access to public transport
- Making housing safe, secure, accessible and adaptable
- Supporting health and social care
