State pension rise is 'woefully insufficient' says expert
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Nearly half a million (400,000) pensioners will pay income tax this year because the threshold has remained the same since Boris Johnson came into power. Some 1.2 million pensioners have been taken over the personal tax-free allowance threshold – which has been frozen for five years, according to consultancy firm LCP.
Pensioners are one group most affected by the cost of living crisis because many are depending on a lower income or the state pension alone.
Now figures show that more and more are being forced to pay income tax because the threshold at which it has to be paid hasn’t changed in five years.
Some 7.7 million pensioners are now paying tax on their pensions and earnings, LCP says.
Ex-Liberal Democrat pensions minister Steve Webb, who is a partner at LCP, said it’s only going to get worse for the over-65s.
Mr Webb told the Daily Telegraph: “Where pensioners have income apart from the state pension they are likely to be paying a much higher rate of tax today than a decade ago.
“This tax rate will rise still further in coming years because of the freezing of tax allowances until the mid 2020s.”
It’s been a difficult year for pensioners as they saw the triple lock suspended in 2022 because of the pandemic.
The triple lock stated the basic State Pension and new State Pension must rise each year in line with CPI, the rise in earnings or 2.5 percent, whichever is higher.
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MPs have however promised that the suspension was only for one year and will return in 2023.
If it goes ahead the increase should take place in April and will be welcomed by pensioners who have been struggling with rising prices.
Up to 850,000 state pensioners could be missing out on pension credit as new figures show an estimated £1.7billion is left unclaimed.
Pensioners are usually eligible for pension credit if they earn less than £182.60 a week.
How much is Pension Credit?
Applying for this state benefit will mean their earnings are topped up to £182.60 a week.
Couples will qualify if they earn less than £287.70 combined and will have their earnings topped up to this amount if they don’t.
On average, Pension Credit can be worth up to £3,300 per year, but that’s not the only thing pensioners who don’t claim are missing out on.
Pension credit claimants may also be able to claim:
- Reduced council tax bills
- Capped water bills
- Warm Home Discount Scheme of £140 off fuel bills
- £25 in Cold Weather Payments
- Disabled Facilities Grant (up to £30,000) to make changes to a home
- Homeowners can apply for up to £10,000 to pay for a boiler
- Homeowners can get help to pay for double glazing as part of the Green Homes Scheme
- Up to £300 in Winter Fuel Payments
- Free wigs or fabric support provided by the NHS
- Help with housing costs
- Help with funeral costs
- Bereavement support payments
- Reduced court fees.
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