Healey to shield a million state-pension-only retirees from income tax, but savers with £1 extra will still pay
John Healey, who resigned as Chancellor in June demanding Britain reach 3% of GDP on defence by 2030, now says the timetable will wait for next year's spending review.
Next April's full state pension is projected to rise 3.9% to £13,036, pushing it above the £12,570 personal allowance threshold for the first time. Chancellor John Healey intends to increase the tax-free allowance to match that figure, but only for pensioners drawing solely on the state pension, at an estimated cost of £200m a year by 2030. Former pensions minister Steve Webb described the proposal as looking 'messy and increasingly expensive'. Industry experts suggest the policy could strike those who did 'the right thing' and saved as inequitable.
Webb warns the growing gap will make the policy 'hard to switch off'.
Healey is expected to leave the £268,275 tax-free lump sum cap untouched.
Old basic state pensioners will get £192.10 a week from April.
