Healey to shield low-income pensioners from income tax in the Budget
Changes are needed to prevent the full, flat-rate state pension becoming liable for income tax after it rises in April.
Pensioners on low incomes will be shielded from income tax by Chancellor John Healey in his first Budget on Wednesday.
The full, flat-rate state pension is expected to increase by 3.9% to £13,036.40 a year from April. This would take the payment above the £12,570 personal tax allowance and therefore be liable for income tax if no changes are made.
The government had already committed to not taxing people who only get an income from the state pension. Healey will explain this pledge will be met by plans for a new tax allowance for low-income pensioners.
Treasury sources concede it will not involve the scale of tax and spending announcements seen from Labour and Conservative governments in recent years.