Q&A: Proposed higher tax allowance for pensioners

The recent proposal by the Conservative Party to provide pensioners with a special (higher) tax allowance – rather than keeping their personal tax allowance frozen in the same way it will be for regular taxpayers until April 2028 – appears to be another rushed idea from politicians who are always ‘tinkering’ with the tax system but have no real strategy or ideas for what the tax system should look like to encourage the ‘right behaviours’ and ensure that there is a balance between the tax collected and the overall fairness and simplicity of the tax system.

What is the perceived problem?

The freezing of the personal tax allowance (until at least April 2028) combined with the ongoing increases in pensions – particularly UK state pensions – has resulted in an increasing number of pensioners becoming liable to a UK tax charge. This development has – in some...