Granny Tax Stays As ConLib Win Vote

Granny Tax Stays As ConLib Win Vote.

Controversial plans to freeze age-related income tax allowances for pensions is to stay as MPs voted by 298 to 231 on Thursday against Labour's proposal to drop the plan announced in the recent Budget.

Currently, pensioners earning less than about £24,000 a year get a more generous tax-free allowance than people of working age.  Individuals aged between 65 and 74 can earn £10,500 before paying income tax, while those aged 75 or over have a £10,660 allowance.  This compares with an allowance of £8,105 for other workers.

However, from 2013, the government plans to freeze those allowances for anyone already aged 65, and scrap them altogether for anyone who turns 65 after 5 April, 2013.  This means that pensioner income will not increase in line with inflation after that date.