‘Granny tax’ vote lost

Hartlepool MP Iain Wright.
Hartlepool MP Iain Wright.

LABOUR MPs have failed in their bid to overturn a decision to impose a “granny tax” on pensioners’ allowances.

Hartlepool MP Iain Wright and his Easington counterpart Grahame Morris were among politicians who voted against a freeze on age-related allowances during a Commons debate on the Finance Bill.

The vote was lost by 298 for to 231 against.

Labour say that the freeze on age-related allowances will cost some pensioners on relatively modest incomes up to £323 a year.

The over-65s were allowed to keep a higher amount of income before they have to start to pay tax.

For the under 65s, the first £8,105 of income will be tax-free from this month.

But this will change to the first £9,205 in the 2013-14 financial year.

For the 65-74 age group, the first £10,500 is tax-free from this month.

For the over-75s, the personal allowance will be £10,660.

But this extra allowance will be gradually withdrawn from those pensioners with a taxable income of between around £24,000 and around £29,000.

And anyone with an income of more than £100,000 will have all their personal allowance gradually withdrawn, regardless of age.

Mr Wright said: “This is going to have an impact on decent, hard-working pensioners who have contributed to pensions all their working lives.

“I think it’s unfair – that’s why I voted against it.”

He said people turning 65 next year, with an average occupational pension of £67 a week, would be hit the hardest.

Mr Wright added: “Budgets are always about different priorities and show the values of a Chancellor. “I don’t think it’s fair that the Budget provided a tax cut for millionaires while at the same time making sure pensioners have to pay more.”

Mr Morris, who also voted against the move, said: “This Government is attacking older people already struggling on modest incomes, in favour of giving the richest people in the country a tax-cut.

“The so-called granny tax is a real-terms tax-hike for millions of older people in this country.

“Worst of all the Chancellor has tried to sell these changes as a tax simplification to cover up what is clearly a tax grab.”