Belfast Telegraph

MPs to debate tax allowance change

MPs are to debate changes to pensioners' tax allowances, which experts have warned could hit those in Northern Ireland the hardest.

The Government will be urged to consider the potential impact of the so-called "granny tax", which sees the removal of extra personal tax allowances for those turning 65 after April 5.

The Association of Chartered Certified Accountants (ACCA) claimed pensioners in Northern Ireland will feel the brunt of the changes because their discretionary income is 53% lower than the rest of the UK.

ACCA Ulster Network's Brian McGuire said it was unfair to dictate how much tax an individual pays based on when they turn 65. "Anyone turning 65 after April 5 2013 has to pay £259 a year more than those who turned 65 before that cut-off date," Mr McGuire said. "Available means to pay doesn't seem to come into play."

He said discretionary household income in Northern Ireland is £77 a week, compared with the UK average of £146.

Mr McGuire, who based his figures on the latest Asda Income Tracker, warned the realisation of the Government policy would have a varying impact on a regional basis. "People spend most of their lives planning finances for retirement. Taking away the allowance for new and future pensioners is like pulling the rug from under their feet," Mr McGuire added.

According to the ACCA, the tax allowance freeze will cost pensioners £500 a year, or £10,000 over their retired lifetime.

The debate on the issue, which takes place in Parliament, was prompted after pressure groups secured 114,464 signatures in a petition.

Chancellor of the Exchequer George Osborne announced plans in the budget to axe the special tax break that gave pensioners a higher tax allowance. This enabled them to earn an extra £3,000 before paying income tax. Now, anyone who reaches their 65th birthday after April 5 2013 will no longer qualify for the higher tax allowance. This means people approaching retirement will have the same tax allowance they had when they were in work and earning more money.

Mr Osborne said the measures were introduced to raise an extra £3.5 billion over the next five years. But pensioners and pressure groups have called for a u-turn.

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