Chancellor Rachel Reeves has confirmed income tax thresholds would be frozen for three more years.
Chancellor Rachel Reeves has confirmed income tax thresholds would be frozen for three more years.
A two-tier state pension has become the Labour Party government’s latest weapon against workers, it has been warned. Labour Party government Chancellor Rachel Reeves has confirmed income tax thresholds would be frozen for three more years.
But at the same time, Ms Reeves announced that people on solely the old or new state pension would not pay tax this Parliament. The Chancellor later repeated the policy on ITV News.
The announcement sparked outrage at the Labour Government’s creation of a “two-tier’ system that made some retirees more equal than others.
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Conservative peer Lord Mackinlay said the “two-tier taxation” would leave people questioning why they ever saved into a pension. Helen Morrissey, of Hargreaves Lansdown, called it “grossly unfair” on those who had.
Lord Mackinlay, a Conservative peer and former MP, said: “The elegant solution would have been to give everyone in the country a personal [tax-free] allowance reflecting the basic state pension. It would have been easy and fair.
“But no, this Government has decided to introduce yet another two-tier taxation for those who have worked hard all their life and been diligent. People will ask, what’s the point in saving into a pension? Why did I bother?
“This is where fiscal drag hits the road of reality for millions of taxpayers. This Labour Chancellor has created this.”
Hargreaves Lansdown’s Helen Morrissey said the Chancellor’s “rushed announcement” would cause division and further confusion in an already complex system.
She said: “It will be seen as grossly unfair for those pensioners who have income tax taken because they have contributed to a workplace or private pension.
“Some of these pensioners may have incomes that are only fractionally higher and rightly feel aggrieved.”
The Telegraph’s Rob White added: “By handing tax breaks to just some retirees, the Chancellor has opened a divide that will grow and grow”