“MPs have passed a motion in the Commons to cancel the raise, but so far it’s being ignored by Prime Minister Boris Johnson. The Government broke a manifesto pledge when it announced the move, leading to negative headlines across the board, which makes it potentially harder for them to now U-turn.”
Triple lock inflation linking:
“Pensioners relying on the state pension are going to be hit hard in the current cost of living crisis as they are getting a below-inflation increase in their pension payments of 3.1%, but are a group that spend more of their money on things like energy bills and food, which are seeing large price raises.
“The Government ditched the triple lock this year as the wage inflation figure was so high, but it could revise the inflation figure it uses for the state pension uplift, to better reflect the current inflationary environment. Interestingly, the latest inflation figures are released on the same morning as the Spring Statement, raising questions about whether an alternative measure of inflation will be generated to base any state pension increase on.
“Currently the 3.1% increase in the new state pension will take weekly payments to £185.17, while the basic state pension will rise to £141.87. If they instead rose by 7% pensioners on the new state pension would see an extra £364 a year, while those on the basic state pension would get £279 a year more.”
Unfreeze the income tax bands:
“From April the personal tax-free allowance will be frozen at £12,570, and the higher rate income tax threshold will be frozen at £50,270, rather than increasing in line with inflation as usual. The Treasury forecast this will cost taxpayers £1.6 billion in the next tax year, and so clearly there is room to scrap or delay the freeze and save people money. The freeze will cost someone on £30,000 a year an extra £1,101 in tax by 2026/27 when the freeze is due to end, and someone on £50,000 will face an extra £5,282in tax.
“However, a cynical person might point out that the frozen allowances are a stealth tax and so not well understood by many people. This means that unfreezing allowances might not create the kind of ‘tax giveaway’ headlines that the Government would be looking for from any handout announcement.”
Lifetime ISA exit penalty:
“The Government reduced the Lifetime ISA exit fee to 20% during the Covid pandemic, to reflect the fact that lots of people would have to withdraw their money due to losing their job or seeing their income fall. This sets a precedent and shows that it’s easy for the Government to implement a reduction.
“With the cost of living soaring and wages failing to keep up, it’s inevitable that some people will reluctantly have to dip into their Lifetime ISA savings just to pay their bills and meet the rising cost of food, petrol and energy bills. The Government could reduce the exit fee to 20%, so it just reclaims the Government bonus. It will give people a bit of breathing room to dip into their savings and not face the punitive exit fee for doing so.”
