Triple lock increase all but wiped out by Hunt’s stealth tax raid

Jeremy Hunt’s six-year freeze in income tax thresholds is expected to cost pensioners £170 – Toby Melville/REUTERS

Pensioners will be just £20 better off in real terms this year after their triple lock increase was all but wiped out by Jeremy Hunt’s stealth tax raid, a leading think tank has said.

An 8.5pc rise in the state pension will leave retirees £190 better off in the next tax year after adjusting for higher prices, the Resolution Foundation said.

This will be offset by the Chancellor’s six-year freeze in income tax thresholds, which will cost pensioners £170 – meaning they stand to gain just £20 overall.

By contrast the Foundation said a parent earning £60,000 was in line for a net tax cut of £900 because of reductions in National Insurance (NI).

Mr Hunt’s decision to raise the income level at which people are asked to start paying back child benefit to £60,000 will also boost their earnings by £1,300. Meanwhile, working parents of two-year-olds will start to benefit from 15 hours a week of free childcare from April.

The Resolution Foundation said: “A basic-rate tax paying pensioner will essentially see their above-inflation state pension rise wiped by this April’s personal allowance freeze.”

The triple lock on state pensions ensures payments rise in line with the highest out of inflation, average wage growth or 2.5pc each April.

This year the full state pension will rise by £17.35 per week from £203.85 to £221.20, in line with earnings – an increase of 8.5pc.

The Resolution Foundation has previously highlighted that eight million pensioners are facing a £1,000 hit from Mr Hunt’s stealth tax raid, amid a growing backlash over the Chancellor’s decision to prioritise millennials in the Budget.

The elderly and higher earners are set to be the biggest losers by the end of this parliament because pensioners do not benefit from recent NI cuts.

Analysts also highlighted that UK taxpayers faced the highest council tax bills on record.

They said: “At the same time as NI rates are falling, council tax is continuing its upwards march. Council tax will be going up in England and Wales, with average increases of 5.1pc and 7.7pc.

“This tax is now heading to a joint record high (ignoring the pandemic) in the coming years – reaching 1.7pc of GDP in 2024-25, and projected to hit 1.8pc in the next parliament.

“This is not a great trajectory for Britain’s worst-designed tax, which is both regressive and hopelessly out of date as it is based on property valuations 33 years ago.”

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