Martin Lewis Secures Tax Commitment for Pensioners from Reeves

Money expert Martin Lewis recently engaged with UK Chancellor Rachel Reeves regarding critical announcements from the latest Budget, particularly those affecting low-income pensioners. His dialogue with Reeves yielded a vital commitment that is expected to alleviate concerns among pensioners about income tax implications.

In her Budget address, Reeves confirmed that the new full state pension will increase by 4.8 percent starting in April 2024, raising the pension to £12,548 annually. This increase has raised alarms as it approaches the standard personal allowance of £12,570. Concerns have emerged that older individuals relying solely on this new pension might inadvertently exceed the threshold for income tax, triggering additional tax responsibilities and the necessity to file annual returns.

Reeves addressed these worries directly on Martin’s ITV show, assuring viewers, “If you just have a state pension and you don’t have any other pension, we are not going to make you fill in a tax return. I make that commitment for this parliament.” She emphasized that the government is committed to ensuring pensioners are not burdened with tax liabilities for minimal income.

While Lewis welcomed this clarification, he expressed dissatisfaction with another aspect of the Budget. The Chancellor announced a reduction in the tax-free cash Individual Savings Account (ISA) limit from £20,000 to £12,000 starting in April 2027, a move aimed at encouraging savers to invest in stocks and shares ISAs. Notably, this change will not affect individuals aged 65 or over. Lewis criticized this approach, stating, “I think this is the wrong way to do it. There are other ways to encourage people to invest instead.”

In response, Reeves highlighted that 90 percent of savers would continue to enjoy tax-free savings and noted that the government is modifying advice and guidance rules. She mentioned collaboration with the Financial Conduct Authority to facilitate these changes, stating, “A number of the ISA providers have already said they will be promoting investment in UK equities, which is a great boost for businesses starting up and scaling up in Britain.”

The discussion also covered energy prices, as the Chancellor announced measures projected to reduce average bills by £150. Lewis expressed cautious optimism about this initiative, which involves removing two charges from energy bills, including a previously criticized home insulation scheme. “I would have preferred it to have come off the standard charge then everyone gets the same reduction, but it is better than nothing,” he remarked.

He urged households on standard tariffs to consider switching to fixed-rate deals, asserting, “I would absolutely not be waiting; I would be getting a good saving now.”

Concerns regarding the impact of the £150 saving on those with fixed-rate plans prompted Lewis to engage with Energy Secretary Ed Miliband. Miliband assured that the government is focused on ensuring that all consumers, including those on fixed rates, benefit from the planned reductions. He stated, “We are determined that people feel the benefit, including those on fixed rates, and we are going to be working with the companies and having discussions with them confidentially in advance.”

This dialogue highlights ongoing efforts by the UK government to address financial concerns for pensioners and wider energy price issues, reflecting a commitment to support vulnerable populations amidst changing economic conditions.