Conservatives promise tax cut for pensioners with ‘triple lock plus’

Published

1 year ago

May 27, 2024

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The Conservatives have promised to cut taxes for pensioners by creating a new “age-related” tax-free allowance – dubbed “triple lock plus”.

Currently, people can receive £12,570 a year of their pensions before they start paying income tax on them – the same figure as the personal allowance for those who work.

But if the party wins the next election, a pensioner’s allowance would rise in line with either average earnings, inflation or by 2.5% – whichever is higher – from next April, echoing the rules on annual state pension increases.

Rishi Sunak said the move “demonstrates we are on the side of pensioners”, and would bring people “peace of mind and security in retirement”.

But Labour’s shadow paymaster general, Jonathan Ashworth, called it “another desperate move from a chaotic Tory party torching any remaining facade of its claims to economic credibility”.

He added: “Why would anyone believe the Tories and Rishi Sunak on tax after they left the country with the highest tax burden in 70 years?”

The Liberal Democrats said the Conservatives had “hammered pensioners with years of unfair tax hikes”, adding: “People won’t be fooled by yet another empty promise from Rishi Sunak after this record of failure.”

The Conservatives first brought in the triple lock when they were in a coalition government with the Liberal Democrats in 2010 to tackle pensioner poverty, saying the annual rise would protect retirees from hikes in living costs, and both Labour and the Lib Dems have promised to keep it in place.

However, while the state pension has continued to rise, the threshold for when both pensioners and those of working age pay income tax has remained frozen since April 2021 when Boris Johnson was in power, meaning some of those on lower incomes have been brought into paying tax.

This new measure would change that for pensioners, with a “guarantee in legislation that the pensioners’ personal allowance will always be higher than the level of the new state pension”.

The Tories said eight million people would save around £100 next year and gain further savings each year as the tax-free allowance grew, with the £2.4bn a year policy paid for through “clamping down” on tax avoidance and evasion.

Making the announcement, Mr Sunak said: “I passionately believe that those who have worked hard all their lives should have peace of mind and security in retirement.

“Thanks to the Conservatives’ triple lock, pensions have risen by £900 this year and now we will cut their taxes by around £100 next year.

“This bold action demonstrates we are on the side of pensioners. The alternative is Labour dragging everyone in receipt of the full state pension into income tax for the first time in history.”

But Labour’s Mr Ashworth hit back, saying: “Not only have they promised to spend tens of billions of pounds since this campaign began, they also have a completely unfunded £46bn policy to scrap national insurance that threatens the very basis of the state pension.

“Labour will protect the triple lock. But Rishi Sunak is planning to reward Britain’s pensioners for their loyalty by stabbing them in the back, just like he did to Boris Johnson and just like he has done to his own MPs.”

Sunak turns gaze to older voters – and leaves questions for Labour

Rob Powell

Political correspondent

@robpowellnews

This is another bold and very political announcement by the Conservatives.

It was only months ago that there had been discussion in Whitehall of whether the triple lock had a future at all, given its extortionate cost.

Now the Tories have gone in the opposite direction, dressing up an income tax cut for pensioners as a beefing up of the expensive ratchet measure.

It will likely prompt questions of generational fairness, given that tax thresholds for those of working age are still due to stay frozen until 2028, while at the same time the triple lock has seen the state pension rise by 8.5% this year and 10.1% in 2023.

Tory sources pointed out that workers had already had a big national insurance cut. And while they said there were currently no plans to unfreeze allowances more broadly, they did re-emphasise an ambition to keep cutting taxes in other areas if feasible.

This move is political because it will inevitably lead to questions about whether Labour will follow suit and mirror this promise.

If they do not, expect accusations of a Labour tax rise for pensioners.

What’s more, with the state pension expected to rise above the current allowance level in a few years, the Tories are also suggesting that a Labour government would drag everyone who claims the state pension into paying income tax for the first time.

The hobbling irony there, of course, is the main reason that would happen is the tax allowance freezes that the Tories brought in.

Coming off the back of the national service policy blitz, this is clearly another attempt to reach out to the Tory base of older voters.

Combine that with Rishi Sunak’s recent visits to traditional Conservative heartland seats and it’s hard not to conclude that this is a campaign currently in a defensive mode.

What’s maybe more interesting though is that, as yet, neither Labour nor the Liberal Democrats have criticised the substance of the policy change directly, no doubt aware of the political risks of being seen to line up against tax cuts for pensioners.

While the Conservatives will focus on pensioners, Labour will use Tuesday to appeal to businesses as shadow chancellor Rachel Reeves makes her first major speech of the general election campaign.

She will promise to run “the most pro-growth Treasury in our country’s history” if her party takes power on 4 July, and promises to be both “pro-worker and pro-business, in the knowledge that each depends upon the success of the other”.

It comes after more than 120 business leaders, including chef Tom Kerridge and Wikileaks founder Jimmy Wales, signed an open letter giving their backing to Labour to “achieve the UK’s full economic potential”.

The Liberal Democrats will turn their attention to crime on the campaign trail, pledging to introduce “burglary response guarantee” so all domestic burglaries are “attended by the police and properly investigated”.

Politics

What is a wealth tax, how would it work in the UK and where else has one?

Published

3 hours ago

July 9, 2025

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What is a wealth tax, how would it work in the UK and where else has one?

The idea of a wealth tax has raised its head – yet again – as the government attempts to balance its books.

Downing Street refused to rule out a wealth tax after former Labour leader Lord Kinnock told Sky News he thinks the government should introduce one.

Sir Keir Starmer’s spokesman said: “The prime minister has repeatedly said those with the broadest shoulders should carry the largest burden.”

While there has never been a wealth tax in the UK, the notion was raised under Rishi Sunak after the COVID years – and rejected – and both Harold Wilson’s and James Callaghan’s Labour governments in the 1970s seriously considered implementing one.

Sky News looks at what a wealth tax is, how it could work in the UK, and which countries already have one.

What is a wealth tax?

A wealth tax is aimed at reducing economic inequality to redistribute wealth and to raise revenue.

It is a direct levy on all, or most of, an individual’s, household’s or business’s total net wealth, rather than their income.

The tax typically includes the total market value of assets, including savings, investments, property and other forms of wealth – minus a person’s debts.

Unlike capital gains tax, which is paid when an asset is sold at a profit, a wealth tax is normally an annual charge based on the value of assets owned, even if they are not sold.

A one-off wealth tax, often used after major crises, could also be an option to raise a substantial amount of revenue in one go.

How could it work in the UK?

Advocates of a UK wealth tax, including Lord Kinnock, have proposed an annual 2% tax on wealth above £10m.

Wealth tax campaign group Tax Justice UK has calculated this would affect about 20,000 people – fewer than 0.04% of the population – and raise £24bn a year.

Because of how few people would pay it, Tax Justice says that would make it easy for HMRC to collect the tax.

The group proposes people self-declare asset values, backed up by a compliance team at HMRC who could have a register of assets.

Which countries have or have had a wealth tax?

In 1990, 12 OECD (Organisation for Economic Co-operation and Development) countries had a net wealth tax, but just four have one now: Colombia, Norway, Spain and Switzerland.

France and Italy levy wealth taxes on selected assets.

Colombia

Since 2023, residents in the South American country are subject to tax on their worldwide wealth, but can exclude the value of their household up to 509m pesos (£92,500).

The tax is progressive, ranging from a 0.5% rate to 1.5% for the most wealthy until next year, then 1% for the wealthiest from 2027.

Norway

There is a 0.525% municipal wealth tax for individuals with net wealth exceeding 1.7m kroner (about £125,000) or 3.52m kroner (£256,000) for spouses.

Norway also has a state wealth tax of 0.475% based on assets exceeding a net capital tax basis of 1.7m kroner (£125,000) or 3.52m kroner (£256,000) for spouses, and 0.575% for net wealth in excess of 20.7m kroner (£1.5m).

The maximum combined wealth tax rate is 1.1%.

The Norwegian Labour coalition government also increased dividend tax to 20% in 2023, and with the wealth tax, it prompted about 80 affluent business owners, with an estimated net worth of £40bn, to leave Norway.

Spain

Residents in Spain have to pay a progressive wealth tax on worldwide assets, with a €700,000 (£600,000) tax free allowance per person in most areas and homes up to €300,000 (£250,000) tax exempt.

The progressive rate goes from 0.2% for taxable income for assets of €167,129 (£144,000) up to 3.5% for taxable income of €10.6m (£9.146m) and above.

It has been reported that more than 12,000 multimillionaires have left Spain since the government introduced the higher levy at the end of 2022.

Switzerland

All of the country’s cantons (districts) have a net wealth tax based on a person’s taxable net worth – different to total net worth.

It takes into account the balance of an individual’s worldwide gross assets, including bank account balances, bonds, shares, life insurances, cars, boats, properties, paintings, jewellery – minus debts.

Switzerland also works on a progressive rate, ranging from 0.3% to 0.5%, with a relatively low starting point at which people are taxed on their wealth, such as 50,000 CHF (£46,200) in several cantons.

Politics

Jingye and Whitehall officials hold talks over British Steel future

Published

6 hours ago

July 9, 2025

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Jingye and Whitehall officials hold talks over British Steel future

The Chinese owner of British Steel has held fresh talks with government officials in a bid to break the impasse over ministers’ determination not to compensate it for seizing control of the company.

Sky News has learnt that executives from Jingye Group met senior civil servants from the Department for Business and Trade (DBT) late last week to discuss ways to resolve the standoff.

Whitehall sources said the talks had been cordial, but that no meaningful progress had been made towards a resolution.

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Jingye wants the government to agree to pay it hundreds of millions of pounds for taking control of British Steel in April – a move triggered by the Chinese group’s preparations for the permanent closure of its blast furnaces in Scunthorpe.

Such a move would have cost thousands of jobs and ended Britain’s centuries-old ability to produce virgin steel.

Jingye had been in talks for months to seek £1bn in state aid to facilitate the Scunthorpe plant’s transition to greener steelmaking, but was offered just half that sum by ministers.

British Steel has not yet been formally nationalised, although that remains a probable outcome.

Jonathan Reynolds, the business secretary, has previously dismissed the idea of compensating Jingye, saying British Steel’s equity was essentially worthless.

Last month, he met his Chinese counterpart, where the issue of British Steel was discussed between the two governments in person for the first time.

Jingye has hired the leading City law firm Linklaters to explore the recovery of hundreds of millions of pounds it invested in the Scunthorpe-based company before the government seized control of it.

News of last week’s meeting comes as British steelmakers face an anxious wait to learn whether their exports to the US face swingeing tariffs as part of US President Donald Trump’s trade war.

Sky News’s economics and data editor, Ed Conway, revealed this week that the UK would miss a White House-imposed deadline to agree a trade deal on steel and aluminium this week.

Jingye declined to comment, while a spokesman for the Department for Business and Trade said: “We acted quickly to ensure the continued operations of the blast furnaces but recognise that securing British Steel’s long-term future requires private sector investment.

“We have not nationalised British Steel and are working closely with Jingye on options for the future, and we will continue work on determining the best long-term sustainable future for the site.”