The NPC is appealing to Chancellor Rachel Reeves to raise two key thresholds in her Budget to alleviate financial misery for millions of older people this winter.
Despite government claims, next April’s Triple Lock rise in the state pension will not compensate for the recent cuts to the universal winter fuel payment to help with high energy bills. NPC fears the loss will force many to cut back on heating and food in the coldest part of the year.
However, the Chancellor could make a real difference to those struggling to make ends meet by increasing two key financial thresholds in her Budget on Tuesday, 30th October.
Our first call is for an increase in the qualifying income threshold for anyone applying for pension credit - a benefit which unlocks crucial financial assistance such as Housing Benefit. (Currently set at £218 a week for an individual, or £332 for a couple).
The second, call is to raise the threshold for the level of income at which you start to pay basic rate tax, which has been frozen at £12,570 since 2022, despite prices and wages increasing.
Media pundits predict that the Chancellor intends to retain the frozen tax thresholds in particular, to raise more money to fill a £22bn black hole in the economy. This ‘fiscal drag’ scenario is dubbed a ‘stealth tax’ because it brings in money to the Treasury simply by allowing income to outstrip the tax thresholds.
It works like this: as prices for food and energy have escalated, smaller rises in basic income – from state to occupational pensions – have not risen at the same rate. But the income increases have still been enough to push more pensioners above the threshold for paying income tax – and crucially, more going above the qualifying income threshold for pension credit.
Jan Shortt, NPC General Secretary says: “Rachel Reeves has a unique opportunity with her first Budget to correct some of the tax and benefits anomalies which are hitting our oldest and most vulnerable hard this winter.
“Ideally, NPC would prefer that the universal Winter fuel payment – of between £200 and £300 per year – would continue going to all 12.5 million retired people. Or at the very least, that the measure is postponed for this year until proper consultations on the impact of the cuts take place.
“However, it would offer real relief to many older and vulnerable people if the Chancellor at least increased the qualifying income threshold for pension credit above the current rate of less than £218 a week for an individual, or £332 a week for a couple.
“It would also be a relief to millions if she also raised the tax threshold - the level of income where you start to pay basic rate of tax, from the current rate of £12,570, to more than £15,000** as mooted earlier this year.
Jan added: “Despite claims that most older people don’t need the winter fuel payment, Age UK calculate that 2.5 million are going to be in serious trouble this Winter without it. To ignore the loss of the payment is not an option for the government.”
The NPC is calling on people to contact their constituency MPs in the run-up to next Tuesday’s Budget to highlight NPC’s calls to the Chancellor.
*Age UK: 2.5 million pensioners who badly need the money to stay warm this winter will not receive it and will be in serious trouble as a result… particularly:
Those on low incomes who just miss out on Pension Credit.
Those who have unavoidably high energy needs because of disability or illness.
The 1 million people who don't receive Pension Credit even though they're eligible for it.
** Petition before the Spring Budget: https://www.express.co.uk/finance/personalfinance/1875213/income-tax-personal-allowance-petition-state-pension
ENDS
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