Consumer advocate Martin Lewis has announced a significant win for low-income pensioners following a major Budget revelation. Chancellor Rachel Reeves has confirmed that the state pension will increase by 4.8% next April, reaching £12,548 annually. This adjustment brings the pension amount close to the standard personal allowance of £12,570, beyond which income tax is typically due.
Previously, concerns arose that additional income besides the state pension might push pensioners over the tax threshold, necessitating tax payments and annual tax return filings. However, during an ITV show, Chancellor Reeves assured that individuals relying solely on the state pension will not be subject to income tax or tax return requirements for the duration of this parliamentary term.
Expressing appreciation for the clarity on tax matters, Martin Lewis emphasized the importance of spreading this information. However, Lewis criticized the government’s decision to reduce the tax-free cash ISA limit from £20,000 to £12,000 starting April 2027 for most individuals, with exceptions for those aged 65 and above.
The Labour party advocates for diverting savings into stock and shares ISAs to support UK-listed companies, a move Lewis disagrees with. Reeves highlighted that the majority of savers will still enjoy tax-free savings, with changes in advice and guidance rules promoting investments in UK equities.
While Lewis acknowledged the Chancellor’s understanding of the issue, he expressed dissent with her proposed solution. Additionally, in a Budget special episode of The Martin Lewis Money Show, Lewis advised on managing energy prices following the Chancellor’s announced measures to reduce average bills by around £150.
The energy cost reduction will result from eliminating certain bill add-ons, including an ineffective home insulation scheme. Lewis recommended those on standard tariffs to consider switching to fixed-rate deals promptly to maximize savings. Concerns arose about fixed-rate customers missing out on the £150 saving next year, but Energy Secretary Ed Miliband assured that efforts are underway to ensure all customers benefit from the cost reduction.