Budget bombshell as pensioners set to miss out on £360 in ‘tax rise’ | Politics | News

Pensioners look set to miss out on hundreds of pounds if Jeremy Hunt cuts National Insurance instead of Income Tax in the Budget.

The Chancellor is widely expected to slash NI – as exclusively revealed by the Daily Express – when he delivers his financial plan for Britain.

Cutting it by 2% will save 27 million workers £450 on average, he will say.

Combined with the same cut he made in the Autumn Statement it amounts to a tax cuts of £900 for the average worker.

Mr Hunt and Rishi Sunak decided against cutting income tax after the Office for Budget Responsibility downgraded the amount of “fiscal headroom” available for tax cuts or spending commitments.

In December there was about £30 billion but by last week that figure had fallen to £12.8 billion because of a combination of higher government borrowing costs and lower than expected tax receipts.

New analysis by the TaxPayers Alliance shows cutting National Insurance by another 2% would see retirees miss out.

With a pre-tax income of £30,570, the TPA says the average retiree has a taxable income of £18,000.

Before the NI cut in last year’s Autumn Statement, the pressure group argues the average retiree paid £0 in NI contributions and £3,600 in income tax.

Afterwards they paid £0 in NI contributions and £3,600 in income tax.

The TPA says that if the Chancellor cuts NI by another 2% in today’s Budget, this average retiree will pay £0 in NI contributions and £3,600 in income tax.

If the Chancellor cuts income tax by 2p in the Budget 2024, this average retiree will pay £0 in NI contributions and £3,240 in income tax – saving £360 as a result.

Cutting income tax on both occasions instead of NI would have saved pensioners £720, the TPA says.

Darwin Friend, head of research at the TaxPayers’ Alliance, said: « Pensioners will feel deeply let down if the chancellor doesn’t cut income tax.

« While the government is right to ensure that workers have more in their pockets at the end of the month, there are many households that will miss out on relief if national insurance is prioritised.

« Jeremy Hunt should focus on an income tax cut, which would do the right thing by retirees and those still in work. »

Dennis Reed, director of the Silver Voices campaign group, said: “Pensioners will be bitterly disappointed if they miss out on hundreds of pounds in this Budget.

“Cutting National Insurance again pretty much amounts to a tax rise for retirees from April.

“There would need to be some significant balancing measures, like increasing the state pension, in there otherwise Mr Hunt will dismay a lot of older voters.”