MSE News: Budget 2012 - £3.3 billion tax blow for pensioners

Eco_Miser

Gracchus_Babeuf wrote: »

Equalising the allowances makes sense - but only if they are equalised at the higher level! Otherwise you get one lot losing out - and in this case it is pensioners.

But it is being equalised at the higher level. Anyone who is 65 or over in April 2013 will be on the then current higher allowance (unless their income is too high) until such time as the standard allowance equalises with it. I, on the other hand, just miss out timewise, and will stay on the standard allowance for ever.

Grumpy_Old_Duffer

MSE_Helen wrote: »

"Pensioners received a £3.3 billion blow in today's Budget as they will eventually lose the higher personal allowance they enjoy in comparison to the rest of the population. They will eventually pay the same tax as everyone else rather than enjoying their current lower payments."

The solution for the pensioners (of which I am soon to be one) is simplz.

Go to RSPCA and adopt a dog, then place all your savings in a Monaco account in the dogs name, but don't call the dog Rosie as the Bankers in Monaco may get suspicious.

I have it on good authority that this is legal and all above board.;)

Dave_save

londonlydia wrote: »

Dont want to rile anyone! ust wanted to ask the over 65s a question. Whilst you feel that you have the same expenditure as younger generations, what is the arguement for needing more?

Well, you could ask that question of anyone, irrespective of age. Those over 65 have had an expectation of an income based on a higher level of personal tax allowances. That's always been the case.For the government to change the rules to the detriment of a section of society is a bit like paying for a Rolls Royce and finding they've delivered a second hand Cortina.

molley

Eco_Miser wrote: »

But it is being equalised at the higher level. Anyone who is 65 or over in April 2013 will be on the then current higher allowance (unless their income is too high) until such time as the standard allowance equalises with it. I, on the other hand, just miss out timewise, and will stay on the standard allowance for ever.

But surely once the two are equalised the standard allowance WILL be the Age Related Allowance..it's just that it will be the same ???..unless I am missing something

Eco_Miser

Yes, it will be exactly the same, and at least equal to the 2012-13 Age allowance- which means anyone born before 5 April 1948 is not losing Age Allowance. I, however, will have a period where I am over 65 but not receiving the Age Allowance (unless the standard allowance is increased in 2014 be even more than it will be in 2013).

Dave_save

molley wrote: »

[/B]

But surely once the two are equalised the standard allowance WILL be the Age Related Allowance..it's just that it will be the same ???..unless I am missing something

Eventually the Personal Allowances for everyone will be the same. Age won't be a factor. Ossie today announced the first phase. The big problem with the phasing is that some lose out almost immediately. Or you could say some win immediately, depending on which angle you take.

Of course Ossie could have done this the other way round and brought up the Personal Allowance to the Age Related PA. Achieves the same thing but costs more. So in effect Ossie has used pensioners as a sacrifice to achieve his aim, all in the name of 'fairness'? I don't think so.

Eco_Miser

Dave_save wrote: »

Of course Ossie could have done this the other way round and brought up the Personal Allowance to the Age Related PA. Achieves the same thing but costs more. So in effect Ossie has used pensioners as a sacrifice to achieve his aim, all in the name of 'fairness'? I don't think so.

But that's what he is doing - over a period of a few years the standard Personal Allowance is being increased well above inflation until it reaches the Age Allowance. The Age Allowance isn't being decreased at all.

Dave_save

Eco_Miser wrote: »

But that's what he is doing - over a period of a few years the standard Personal Allowance is being increased well above inflation until it reaches the Age Allowance. The Age Allowance isn't being decreased at all.

He is freezing the age related PA, where the norm would have been to continue to increase it. If his motives were just to 'simplify and make the system fair', he could have lifted the standard PA at a greater rate to eventually catch up, obviously over a much longer period. Now THAT would have been fair. (Highly unlikely, it would cost too much). I believe the estimated savings will reach about £1.4 billion per year eventually. That's £1.4 billion less going into the economy!

pqrdef

downshifter98 wrote: »

Does this change also mean the end of part of the allowance being reduced when income exceeds roughly £25,000 in retirement? If so surely this is a tax reduction for anyone earning just above this figure?

Nope, nobody wins. If the age differential were maintained as expected, all taxpayers would feel the benefit of the 2013 increase in general personal allowance.

Under the new plan, over-65s will only benefit fully from that if they're above the clawback zone. Below the clawback zone, they get no benefit at all, with a sliding transition in between.

gadgetmind

SandraScarlett wrote: »

Yes, my neighbour asked me that this afternoon. Apparently, he loses £1 of allowance for every £2 he receives over £24,000 (his private pension and State Pension) and wondered if that has been scrapped.

As the age related allowance is being replaced by a larger allowance for everyone, it's 99% certain that the allowance "claw back" will be going.

This is good news for those who've saved hard for their retirement, particularly if they also intend to retire early as they won't have to wait until 65 for the larger allowance.

For others it's broadly neutral.