Fury at Osborne's £1bn 'granny tax'
Chancellor George Osborne has been accused of imposing a £1 billion "granny tax" on pensioners as he used his Budget to cut the 50p top rate for Britain's wealthiest earners and lift thousands of low-paid workers out of taxation altogether.
The Treasury acknowledged that 4.5 million pensioners will lose out as a result of the decision to phase out their age-related allowances and Age UK said it was "disappointed" with the move, warning it could leave some pensioners up to £259 a year worse off.
Economist Ros Altmann, director-general of the Saga Group, denounced it as an "absolutely outrageous assault" on all pensioners with incomes between £10,500 and £24,000.
Mr Osborne presented his statement as a "Budget that rewards work", announcing that a £1,100 rise to £9,205 in the income tax threshold will take another 840,000 of the low paid out of taxation and save 24 million people £220 a year.
But around 300,000 people will be drawn into paying income tax at 40% from 2013/14 by a reduction in the higher rate threshold to £41,450.
The 50p top rate on earnings over £150,000 introduced by Labour will be cut to 45p from April next year, after a study by HM Revenue and Customs (HMRC) found it raised "next to nothing", said Mr Osborne.
The widely expected cut was offset by a hike in stamp duty on properties worth more than £2 million and a commitment to clamp down on "aggressive" tax avoidance.
Deputy Prime Minister Nick Clegg hailed it as "a Budget every liberal can be proud of", pointing to the lift in the income tax threshold and increases in taxes on wealth which Liberal Democrats had demanded in negotiations with Conservative coalition partners.
Mr Osborne told MPs that "Britain is going to earn its way in the world" as a result of the Budget. "Together, the British people will share in the effort and share the rewards," he said. "This country borrowed its way into trouble. Now we're going to earn our way out."
However, the heavily trailed tax changes threatened to be overshadowed by the row over the phasing out of pensioners' allowances.