Consumer advocate Martin Lewis has announced a breakthrough in support for many low-income pensioners following a significant announcement in the Budget by Chancellor Rachel Reeves. Reeves confirmed that the upcoming state pension increase will be 4.8%, bringing it to £12,548 annually, close to the standard personal allowance of £12,570, which triggers income tax payments.
There were concerns that additional income for pensioners could push them over the tax threshold, requiring them to file tax returns. However, during an ITV show, the Chancellor assured that individuals relying solely on the state pension would not be subject to income tax or filing tax returns for the current parliamentary term.
Lewis commended the clarity on tax matters, emphasizing the importance of spreading the information. He also criticized the government’s decision to reduce the tax-free cash ISA limit from £20,000 to £12,000 in 2027 for most individuals, except those aged 65 and older.
Labour expressed its aim to encourage investment in stock and shares ISAs to support UK listed companies, a move Lewis disagreed with. Reeves highlighted that 90% of savers would still have tax-free savings and mentioned changes in advice and guidance rules to promote investment in UK equities.
Lewis agreed with the Chancellor’s identification of the issue but disagreed with the proposed solution. He also provided advice on energy prices following the Budget, where measures were introduced to reduce bills by an average of £150, including eliminating certain bill add-ons.
He recommended those on standard tariffs to consider switching to fixed-rate deals and emphasized the importance of taking advantage of savings immediately. Concerns were raised regarding fixed-rate customers not benefiting from the £150 saving, but Energy Secretary Ed Miliband reassured that efforts were being made to ensure all customers benefit from the reduction.