Andy Burnham, the Greater Manchester Mayor and Labour leadership candidate, has proposed reducing taxes for pensioners if he becomes Prime Minister. Speaking ahead of Thursday's Makerfield by-election, where he is a candidate, Burnham highlighted concerns from local voters about the freeze on the income tax threshold.
Fiscal Drag Impact on Pensioners
The freeze, which keeps the personal allowance at £12,570 until April 2031, has dragged more pensioners into paying income tax—a phenomenon known as fiscal drag. Burnham told The i newspaper: 'What I have heard on doorsteps is pensioners saying ... the freezing of the personal allowance has dragged more and more pensioners into tax. So, I do think you need to look at that issue as well.'
He added that pensioners feel what they have gained through one policy is being taken away through another. Burnham also vowed to protect the triple lock, which ensures the state pension rises with inflation or average earnings.
Criticism of Current Policy
Chancellor Rachel Reeves announced the threshold freeze, meaning a million people relying solely on the state pension will now pay income tax. Millions more with modest private or workplace pensions are also affected. Critics argue this undermines Labour's triple lock promise.
Sally Tsoukaris of the Civil Service Pensioners' Alliance said: 'Pensioners have worked hard, paid tax throughout their lives and planned for retirement. They shouldn't be dragged into paying more tax by stealth.' Dennis Reed of Silver Voices called the situation 'ludicrous,' noting that the state pension is being taxed again despite already being funded through National Insurance.
A Treasury spokesperson reiterated that those whose only income is the full new or basic state pension will not pay income tax, but details remain unpublished. The cost of a minimum retirement lifestyle has risen to £13,900 for a single person and £22,500 for a couple, according to Loughborough University research.
