Rishi Sunak asserted that under a Labour government, state pensioners would be taxed ‘for the first time in history’ during Tuesday night's televised election debate.
Sunak made his remarks based on Labour's refusal to lower ‘Triple Lock Plus’ cover, which might have boosted tax benefits for state pensioners to a healthy level compared to the current ‘triple lock’ scheme.
The constant benefit tax threshold could have saved domestic pensioners from paying extra tax if triple lock plus cover had been in place.
Rishi Sunak said: ‘I introduced triple lock plus to increase the private allowance for pensioners and to ensure that the nation's pension is not subject to tax in any way, that's all you get under a Conservative government. Keir Starmer broke that promise. For the first time in our country's history, if Labour is elected, pensioners will pay tax.
Conservatives' Triple Lock Plus to Shield Pensioners from Tax
Current tax thresholds allow individuals, even pensioners, to earn £12,570 before having to pay income tax. Increasing state pensions, which currently stand at £11,542 a year, could force pensioners to pay income tax, as the tax thresholds are frozen until 2028.
In the meantime, the Conservatives‘ 'Triple Lock Plus' plans to increase pensioners’ benefits by 2.5%, or their joint salary, in line with inflation. The aim is to protect pensioners from the legal liability of income tax due to frozen thresholds.
However, the policy, which is expected to cost £2.4 billion a year until 2030, could also cost the ordinary pensioner £100 in the coming year and up to £275 until the end of the next parliament.
This can be funded by imposing tax avoidance laws, which are expected to raise £6 billion a year by 2030. Labour has not committed to this plan.
The Tories' assertion of cover, according to Jonathan Ashworth, Labour's shadow paymaster-general, was “simply another determined circulation of a chaotic Tory birthday celebration that blows away any last facade of its claims to monetary credibility”.
Challenging 'Retirement Tax' Claims
During the TV election debate, Rishi Sunak claimed that the kingdom's pensioners would never pay tax under a Conservative government, in response to his argument that pensioners could pay a ‘pension tax’ for the first time on record under Keir Starmer's Labour government.
On the other hand, experts such as Martin Lewis refuted Sunak's claim and pointed out that the elderly already pay tax, especially if they receive the Kingdom pension and have no other sources of income.
However, concerns about the Conservative ‘triple lock plus’ policy, which seeks to protect pensioners from paying tax by adjusting benefits in line with current earnings or inflation, were also raised throughout the debate.
Starmer questioned the viability of Conservative regulation and criticised them for delivering unfunded tax cuts, highlighting investment concerns.