What the budget means for older people

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23 March 2012

What the budget means for older people

The Chancellor announced the 2012 Budget this week and depending on who you listen to it was either a Granny Tax budget or a Robin Hood budget.  Here are some of main areas which effect older people, courtesy of Age UK.

Income Tax

If you pay tax, your personal allowance (the amount you can earn before you pay tax), will go up in April 2012. This is another step towards the Government’s pledge to eventually increase personal allowance to £10,000.

From April this year, people aged 65 to 74 will get an allowance of £10,500 and people aged 75 and over will get a £10,660 allowance, subject to an income limit.

Age-related allowances will be phased out, starting from next year, meaning there will eventually be one level of personal allowance for everyone. This has been dubbed the ‘granny tax’ by the media, as pensioners will no longer get a special tax exemption.

Pensions

The basic State Pension is to rise by £5.30 to £107.45 per week in April this year. The standard rate of Pension Credit, which gives pensioners a guaranteed minimum income level, will increase by 3.9% to £142.70 a week for single pensioners and £217.90 a week for pensioner couples from April this year.

Winter fuel payments

No reference was made to Winter Fuel Payments. This means that unless there are any further announcements during the year, in winter 2012/13 payments will be the standard amounts of £200 for households where people have reached women’s state pension age and £300 for people aged 80 or over.

Inheritance tax

There is no change to the inheritance tax (IHT) threshold – the first £325,000 of inheritance when somebody dies is exempt from IHT. But from April, the rate of IHT for estates over £325,000 which leave 10% or more to charity will be cut from 40% to 36%.

Other changes

Higher duties have been imposed on tobacco products – as of 6pm on 21 March 2012, the duty will rise by 5% above inflation (the equivalent of 37p on a packet of cigarettes).

Fuel duty will rise by 3p a litre in August, as planned, and car tax will rise by inflation. There is no change to existing plans on alcohol duty – it will rise 2% above the rate of inflation (adding more than 5p to the price of a pint).

For a detailed analysis of  budget changes and how they will effect older people, please visit Age UK

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