State pensioners could face tax rises and benefit cuts worth almost £14,000 from Wednesday when the new Budget is announced. Labour has warned of a “painful” budget that could see increased taxes for people of all ages, including pensioners. Prime Minister Keir Starmer has emphasized the need to address the “£22bn black hole” in the nation’s finances, indicating that tax rises are inevitable.
Labour’s Chancellor, Rachel Reeves, is expected to scrutinize several key taxes for potential increases. This could result in households, including state pensioners, paying up to £13,925 more annually. Inheritance Tax, which currently takes 40 percent of every £1 over £325,000 in an estate, is one of the primary taxes expected to undergo changes.
The threshold might be lowered, or the percentage increased to raise additional revenue. Another area under consideration is Capital Gains Tax. At present, profits from selling second homes, business assets, shares, and personal property worth over £6,000 are taxed at varied rates.
Pensioners may face tax increases
Labour might increase these rates or reduce the current allowance from £3,000 to £1,500, thereby raising additional funds. Moreover, a rejigged property value tax has been speculated, with suggestions for levying taxes on properties worth more than £1 million.
Although Council Tax bands are not expected to change, adjustments to current exemptions and thresholds are on the table. Stamp Duty changes are set to be implemented by April 2025, reverting the threshold for first-time buyers from £425,000 back to £300,000. Additionally, the Winter Fuel Allowance has been cut, with stricter eligibility rules disqualifying many state pensioners, effectively making them £300 worse off this winter.
In a pre-budget speech in Birmingham, Prime Minister Starmer addressed the budget’s impact on “working people.” He underlined that any policy decisions are made with the long-term good in mind, despite short-term pain. The upcoming autumn budget is anticipated to be a stringent one, affecting various demographics, including pensioners. Starmer has reiterated that while Labour has ruled out increases in Income Tax, VAT, or National Insurance for employees, other tax hikes are essential to plug the financial gaps.
The detailed measures and their implications on the public will be fully disclosed by Rachel Reeves this Wednesday, with expectations set for “painful” but necessary changes to achieve fiscal stability. Public response will be keenly observed after the announcements, with many people worried about the immediate financial strains these adjustments might bring.
