---

Tax Allowances: Pensioners

Answer

[holding answers 16 April 2012]: The information is as follows:(i)-(iii) The Government remains committed to supporting pensioners and has introduced a triple guarantee for the basic state pension ensuring it will increase each year by the highest of earnings, prices or 2.5%. From April 2012, the basic state pension increased by £5.30, the biggest cash increase ever. The Government has also protected other key pensioner benefits. The triple guarantee means that a full basic state pension will be over £120 per year higher than under the previous Government's uprating policy.The 2012 Budget announced that from 2013-14, age-related allowances will: (a) be frozen at their 2012-13 levels until they align with the personal allowance; and (b) that they will no longer be available, except to those born on or before 5 April 1948 with the higher age-related allowance available only to those born before 5 April 1938.These changes will simplify the personal allowance system and reduce the number of pensioners in self-assessment.The ““Overview of Tax Legislation and Rates”” published alongside Budget 2012 states that, in 2013-14, an estimated 4.41 million individuals will be affected by these changes compared with RPI indexation of age-related allowances and no change to eligibility, though none will see any cash reduction in their personal allowance from April 2013 compared with 2012-13.Estimates of numbers affected and average impacts on income tax paid at Government office region level are provided in the following table for 2013-14. Reliable estimates are not available at the local authority and parliamentary constituency levels due to greater uncertainties in making projections for small geographical areas.

Estimated impacts in 2013-14
	Numbers affected (thousand)	Average change in tax paid (£)
Government office region	Freeze age-related allowance	Restrict eligibility	Combined changes	Combined changes
North East	175	24	178	+84
North West and Merseyside	482	60	487	+83
Yorkshire and the Humber	358	46	363	+83
East Midlands	324	41	327	+82
West Midlands	377	48	381	+82
East of England	433	53	437	+81
London	356	43	358	+82
South East	641	80	648	+82
South West	450	60	455	+84
Wales	237	31	240	+83
Scotland	363	49	367	+84
Northern Ireland	89	13	91	+87
Address abroad/unknown	76	11	78	+87
United Kingdom	4,360	560	4,410	+83

Available information for tax years 2014-15 and 2015-16 is provided in the following table. Estimated impacts arising from the announced changes to eligibility for age-related allowances cannot be provided for tax years after 2013-14, as these will depend on the level of the personal allowance for under 65s.The Government is committed to supporting lower and middle income earners by raising the personal allowance to £10,000, and removing the lowest income individuals out of income tax. Decisions on changes in the personal allowance from 2014-15 will be taken as part of the annual Budget process in the context of the wider public finances.

Numbers affected by the freeze in age-related allowances from April 2013 in 2014-15 and 2015-16
Thousand
Government office region	2014-15	2015-16
North East	189	205
North West and Merseyside	518	559
Yorkshire and the Humber	390	419
East Midlands	346	373
West Midlands	410	443
East of England	465	496
London	382	404
South East	685	730
South West	484	518
Wales	256	274
Scotland	395	423
Northern Ireland	98	106
Address abroad/unknown	85	92
United Kingdom	4,700	5,040

(iv) A projected 471,000 income taxpayers in Scotland are expected to benefit from age-related allowances in 2012-13, ie would pay more income tax if age-related allowances were not available in 2012-13. Within the total, 266,000 are aged 65-74 and 205,000 are aged 75 and over. Reliable estimates are not available at the local authority and parliamentary constituency levels due to greater uncertainties in making projections for small geographical areas.All estimates are based on the 2009-10 Survey of Personal Incomes, projected using economic assumptions consistent with the Office for Budget Responsibility's March 2012 Economic and fiscal outlook.

Secondary information

Type

Written question

Reference

102757; 543 c1204-6W

Session

2010-12

Subjects

Pensioners Scotland Tax allowances Uprating

Contains statistics

Yes

Link

View this Written question on www.publications.parliament.uk