Budget 2025

Albermarle

I'm wondering if she will still be in the job next week .

The markets and her own party were happy enough with the budget, so the realpolitik is that most likely she will be in her job for some time to come.

Happy_Minion

If SP is a persons only income then they could just use the individuals savings allowances, which they aren't using, to solve the problem. This would kick the can down the road a few years for someone else to find a solution for.

Moonwolf

Alexland said:

dunstonh said:

This whole thing smacks of opening one's mouth before the brain has been engaged.  There is so much wrong with this proposal, and hopefully, sufficient MPs will kill it off.

I think she genuinely made an error in what she was saying in conversation with Martin. The treasury were clear that they want to reduce the admin not write off the tax due. My guess is that they will just come up with something like paying the SP with the tax already deducted.

I think she might have realised the error when Martin summed it up but then decided not to correct him as she desperately needed some popularity, it wouldn't cost much if she had to do it, and it's hardly a big mistake compared to the rest of the budget mistakes.

I'm wondering if she will still be in the job next week or how much of this budget will happen.

https://www.gov.uk/government/publications/budget-2025-document/budget-2025-html

"State Pension and Simple Assessment – The government will ease the administrative burden for pensioners whose sole income is the basic or new State Pension without any increments so that they do not have to pay small amounts of tax via Simple Assessment from 2027-28 if the new or basic State Pension exceeds the Personal Allowance from that point. The government is exploring the best way to achieve this and will set out more detail next year."

Didn’t she actually say that no one on only the *NEW* state pension? Martin summed it up as the state pension but that wasn’t what she said.

That rules out those on the old pension getting say £13k or £14k, they would still pay tax.

I am still not clear if this means no bill and physical paying of tax or no tax owed. I think either could be interpreted from the words spoken but above it suggests just the admin burden.

For instance, a shadow additional personal allowance and no tax to pay, or an administrative tweak that means they won’t have to pay the tax but it is still “owed”, for instance, carrying forward a reduced tax code.

Dazed_and_C0nfused

Moonwolf said:

Alexland said:

dunstonh said:

This whole thing smacks of opening one's mouth before the brain has been engaged.  There is so much wrong with this proposal, and hopefully, sufficient MPs will kill it off.

I think she genuinely made an error in what she was saying in conversation with Martin. The treasury were clear that they want to reduce the admin not write off the tax due. My guess is that they will just come up with something like paying the SP with the tax already deducted.

I think she might have realised the error when Martin summed it up but then decided not to correct him as she desperately needed some popularity, it wouldn't cost much if she had to do it, and it's hardly a big mistake compared to the rest of the budget mistakes.

I'm wondering if she will still be in the job next week or how much of this budget will happen.

https://www.gov.uk/government/publications/budget-2025-document/budget-2025-html

"State Pension and Simple Assessment – The government will ease the administrative burden for pensioners whose sole income is the basic or new State Pension without any increments so that they do not have to pay small amounts of tax via Simple Assessment from 2027-28 if the new or basic State Pension exceeds the Personal Allowance from that point. The government is exploring the best way to achieve this and will set out more detail next year."

Didn’t she actually say that no one on only the *NEW* state pension? Martin summed it up as the state pension but that wasn’t what she said.

That rules out those on the old pension getting say £13k or £14k, they would still pay tax.

I am still not clear if this means no bill and physical paying of tax or no tax owed. I think either could be interpreted from the words spoken but above it suggests just the admin burden.

For instance, a shadow additional personal allowance and no tax to pay, or an administrative tweak that means they won’t have to pay the tax but it is still “owed”, for instance, carrying forward a reduced tax code.

This doesn't apply to anyone who has a tax code, RR made that clear in the interview with Martin Lewis.

They would also fall foul of the "sole income" element.

Subject to whatever revisions, clarifications, legislation etc etc happen between now and HMRC implementing the final version.

ToneP

I think she's just opened a can of worms and not really resolved anything.

There's potentially a major issue with stating that those whose income is solely the state pension will not be taxed.

What about the many people that might be in receipt of a very small private pension in addition to the state one?

For example, I'm due to get an old works pension at the princely sum of £50 per year.

Does that mean that that I'd have to pay tax on the combined state and private pension when someone that only gets the same state pension does not?

Dazed_and_C0nfused

ToneP said:

I think she's just opened a can of worms and not really resolved anything.

There's potentially a major issue with stating that those whose income is solely the state pension will not be taxed.

What about the many people that might be in receipt of a very small private pension in addition to the state one?

For example, I'm due to get an old works pension at the princely sum of £50 per year.

Does that mean that that I'd have to pay tax on the combined state and private pension when someone that only gets the same state pension does not?

Based on what has been said so far yes.

Assuming neither of you get more than the standard new State Pension (or standard basic State Pension if on the old rules).

Until you are 75 though you could always game the system and add £2,880 to a personal pension or SIPP and get £720 in basic rate relief despite not paying that much tax in the same tax year.

Albermarle

ToneP said:

I think she's just opened a can of worms and not really resolved anything.

There's potentially a major issue with stating that those whose income is solely the state pension will not be taxed.

What about the many people that might be in receipt of a very small private pension in addition to the state one?

For example, I'm due to get an old works pension at the princely sum of £50 per year.

Does that mean that that I'd have to pay tax on the combined state and private pension when someone that only gets the same state pension does not?

All tax and benefit systems, have so called edge cases, where a small number of special cases lose out.
It is almost impossible to design any legislation so it is 100% fair to everybody ( unfortunately).

Cobbler_tone

It was a soundbyte and not a policy. It’s clearly not worked up yet and don’t be surprised if the system looks very different to any guesses at so far. I don’t think I can remember a budget where so much was (conveniently) deferred until much later.

michaels

The reality is the triple lock is no more as once the state pension is taxed, pensioners will only get 80% of any increase so the state pension will no longer keep up with inflation but will fall in real terms.  Unfortunately the press and it seems politicians are too innumerate to realise this.

Simple enough question - will pensions who only get the full new state pension see their spending power fall in real terms every year - answer yes.

I would have thought the effective ending of the triple lock would be big news but it des not seem to have generated even a whimper.

Alexland

michaels said:

The reality is the triple lock is no more as once the state pension is taxed, pensioners will only get 80% of any increase so the state pension will no longer keep up with inflation but will fall in real terms.  Unfortunately the press and it seems politicians are too innumerate to realise this.

I agree the taxing of SP has probably killed the triple lock until 2031 at least. I don't know if I would go as far as to say the SP will not keep up with inflaiton as perhaps the tax will only offset the escalation above inflation from picking the best of the 3 metrics each year?