Support 100 years of independent journalism.

  1. Business
  2. Economics
21 March 2012updated 07 Sep 2021 11:06am

Granny tax

By George Eaton

George Osborne’s “granny tax”, one of the few Budget measures not leaked to the papers, is of huge political significance. It marks the first time in the life of the coalition that the government has squeezed the elderly. The pensioners’ personal allowance (£10,500 for 65-74 year olds and £10,600 for those aged 75 and over) will be frozen until the general personal allowance (currently £8,105) reaches the same level. In other words, if you take into account inflation, Osborne has hit pensioners with a stealth tax. As as result, 4.41 million people will lose an average of £83 a year, while 360,000 will lose £285.

The defence from the Treasury is that the poorest half of pensioners don’t pay income tax, so only the wealthier ones will be affected. But this won’t stop the measure from dominating tomorrow’s front pages. Expect the Mail and the Telegraph, in particular, to lead on “Osborne’s raid on pensioners”. The simultaneous abolition of the 50p rate, which has handed those earning £1m a £40,000 tax cut, heightens the political danger to the Chancellor.

Sign up for The New Statesman’s newsletters Tick the boxes of the newsletters you would like to receive. Quick and essential guide to domestic and global politics from the New Statesman's politics team. The best of the New Statesman, delivered to your inbox every weekday morning. The New Statesman’s global affairs newsletter, every Monday and Friday. A handy, three-minute glance at the week ahead in companies, markets, regulation and investment, landing in your inbox every Monday morning. Our weekly culture newsletter – from books and art to pop culture and memes – sent every Friday. A weekly round-up of some of the best articles featured in the most recent issue of the New Statesman, sent each Saturday. A weekly dig into the New Statesman’s archive of over 100 years of stellar and influential journalism, sent each Wednesday. Sign up to receive information regarding NS events, subscription offers & product updates.
I consent to New Statesman Media Group collecting my details provided via this form in accordance with the Privacy Policy