NEWSLETTER
Number 55 26 March 2010
Dear Colleague
TAX, PENSIONS AND BENEFIT CHANGES FOR 2010
The Chancellor announced his Budget proposals on 24 March 2010 and confirmed many items which he had included in his pre-budget report on 09 December 2009. (Newsletters Number 53 and 54 refer.) The following items will be of particular interest to pensioners.
Value Added Tax reverted from 15% to 17.5% on 01 January 2010.
There will be no increase in Additional Pensions.
From 12 April 2010, the Pension Credit Guarantee will increase from £130.00 to £132.60 per week for a single pensioner and from £198.45 to £202.40 per week for a couple. The capital disregard is expected to remain at £10,000. The saving credit threshold will be £98.40 for a single pensioner and £157.25 for a couple.
The Winter Fuel Payment for 2010/2011 will remain at £250 for households with someone at or over the female State Pension Age and at £400 for households with someone aged 80 or over.
There has been no announcement about the Christmas Bonus, so we assume that it will remain at £10.
The basic personal allowance for Income Tax will remain at £6,475. The personal allowance for someone aged 65 to 74 will remain at £9,490 and for someone aged 75 or more at £9,640. The maximum income a pensioner can have and still get the age-related allowances in full will remain at £22,900.
The married couple’s allowance (for those aged 75 and over) will remain at £6,965. The married couple’s allowance will remain subject to the £22,900 income limit for age-related allowances but there will be a minimum allowance of £2,670. The married couple’s allowance is given at the rate of 10%.
The blind person’s allowance will remain at £1,890.
From 12 April 2010, Disability benefits will increase by 1.5%.
The existing rates and thresholds for Income Tax will remain unchanged. The 10% starting rate of Income Tax for savings income will apply to income between £0 and £2,440. If an individual’s taxable non-savings income is above £2,440, then the 10% savings rate will not be available for savings income. The basic Income Tax rate of 20% will apply to the first £37,400 (after the personal allowance) of taxable earned income and pensions. The 40% Income Tax rate will apply to such income above £37,400. A new 50% rate will apply to income over £150,000.
The Government has launched a “tax-back” campaign, contacting 3.4 million pensioners in receipt of Pension Credit, to encourage them to claim back income tax which they might have overpaid on savings income in banks and building societies and to register to receive interest on their savings tax-free in the future.
The ISA annual investment limit will remain at £10,200, with a cash limit of £5,100. From 2011/12 the limits will rise in line with the RPI. “ Each September’s RPI figure will be used to set the ISA limits for the following year. The ISA limits will be rounded each year to the nearest multiple of £120 to enable savers to plan monthly saving more easily.” We assume that this means rounding-up, but it is not crystal clear.
The standard rate of Capital Gains Tax remains at 18%.
From 01 October 2010, there will be a new Landline Duty of 50 pence per month, per line.
From 12 April 2010, Bingo Duty will reduce from 22% to 20%
Those aged 60 and above currently have free access to some services and allowances, such as concessionary travel and the winter fuel allowance. The Government has announced that from April 2010 the age at which such benefits can be received will increase in line with the female State Pension age. This will rise gradually from age 60 in April 2010 to age 65 in April 2020. They are still thinking about what to do about the age for free prescriptions.
The Government will oblige banks to provide basic bank accounts so that people can receive payments and set-up direct debits.
For those still in employment, Employee National Insurance contributions will rise by 1% from 11 April 2011.
Yours sincerely
John Amos
Deputy General Secretary