BREAKING: The chancellor John Healey has unveiled several Autumn Budget changes which will affect pensioners, carers and families across the UK.
Delivering the latest annual statement in the House of Commons this afternoon, Healey declared a rise in state pensions by 3.9%, along with changes to carer’s allowance and future reforms to triple lock pensions.
Triple lock pensions will stay unchanged this parliamentary term, the chancellor confirmed, with future plans in the pipeline to adjust the formula of state pensions to ensure they rise in line with inflation or by 2.5% each year from April 2030.
Meanwhile a welcomed announcement for many pensioners was the confirmation of a rise in state pensions by 3.9%, which will bring the current annual payment up to £13,036.40 from April.
While this brings pension incomes above the £12,570 personal tax allowance, meaning recipients would be liable to pay income tax, the chancellor has outlined plans for a new tax allowance for low-income pensioners to ensure those who only receive a state pension are not caught out by this.
A more controversial announcement made prior to the Budget was the changes to inheritance tax (IHT), with pension pots no longer sitting outside of its scope.
Currently, private pension funds that are left unused can be passed on to beneficiaries’ tax free after a loved one has died. However, from April 2027, this will all change under the Labour government’s new plans, as the values of these pension pots will be added to the value of a person’s estate when calculating IHT.
The implication of this for many whose pension pots sit in the thousands is that it will bring more families under the IHT bracket and facing tax bills, with estate planners increasingly urging people to seek professional advice before making hasty decisions around their pensions and future savings.
The chancellor also announced the government will scrap the carer’s allowance earnings cliff edge, which previously led to unpaid carers facing unfair financial penalties after passing the weekly earnings threshold by pennies.
A new digital taper system will replace previous administrative practices, Healey explained, meaning for every additional £1 earned by a carer above the threshold, £1 will be removed from their carer’s allowance – a stark contrast from the previous mounting debts in the thousands many have faced due to the earnings cliff edge.
