A petition demanding that the Government make tax pensions state-free is fast gaining ground toward the threshold necessary to be considered for a debate in Parliament.
The poll on the Parliament website has reached 26,667 signatures at the time of writing, with some people in Chancellor Jeremy Hunt’s own constituency of South West Surrey backing the campaign.
That puts the number of signatories well over the 10,000 threshold, the exceeding of which forces Parliament to consider a petition.
And after gaining more than 9,000 new votes in just eight days, the petition could well have the momentum to be considered for a debate in Parliament.
In order to be considered for a debate in the House of Commons, a poll on the Parliament website must garner 100,000 signatures.
27 people in Rishi Sunak’s constituency had signed the petition, as well as 32 people in DWP minister Mel Stride’s constituency of South Devon as of Wednesday (January 10), but more and more people are backing the poll every day.
The petition states: “The Government should remove income tax on state pension payments, to reduce the tax burden on pensioners.
“As the personal tax allowance has been frozen, some pensioners will now need to fill in tax return. We believe income from state pensions should be tax free, in the same way as benefits are.”
An individual who earns more than £242 a week will become liable to pay income tax, with the threshold frozen at £12,570 a year.
The current full new state pension is already nearing the threshold at £203.85 a week, and with payments increasing 8.5 percent in April, this will climb to £221.20 a week.
Pensioners on the full amount for the basic state pension currently receive £156.20 a week, and this will rise to £169.50 a week from April.
Researchers at management group Quilter previously calculated that if pensioners get at least a four percent pay increase over the next two years, they will be paying tax on their payments in two years’ time, under the current rules.
Roddy Munro, tax and pensions specialist at Quilter, said: “We are soon set to be in the perverse situation where pensioners might have to start paying back their state pension to HMRC because of frozen allowances.
“Given that state pensions will shortly eradicate someone’s personal allowance, any private pension provision other than the tax-free cash lump sum will therefore become taxable at a client’s highest marginal rate.
“For many that could mean big tax bills depending on how much they drawdown. In addition, with the maximum amount of tax-free cash available now capped at £268,275 this adds in another layer of complexity if strong investment returns are achieved as this can only now ever lead to increasing the amount of someone’s pension that becomes fully taxable.”
The DWP has confirmed state pension payments will increase from April 8, two days after the start of the financial year, when benefits will increase 6.7 percent.
Britons are expected to get a drop in their energy bills from April 1, when the new energy price cap comes into effect. Cornwall Insight are predicting the cap will drop 14 percent, with bills for a typical dual fuel customer dropping from the current £1,928 a year to £1,660 a year.
But yesterday’s leap in inflation will have reminded many approaching retirement that the cost-of-living crisis still threatens the nation’s finances
The Consumer Price Index showed that inflation increased to four percent in the 12 months to December 2023, with a rise of 0.4 percent month-on-month from November.
Chancellor Jeremy Hunt pointed out that inflation doesn’t necessarily fall in a straight line and Prime Minister Rishi Sunak has still met his target of halving inflation.
The Government website has a state pension forecast tool which shows how much state pension a person is on track to receive.
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