Andy Burnham is backing Rachel Reeves' plan to shield state pensioners from HMRC tax bills if they rely solely on Department for Work and Pensions (DWP) payments with no other income. The incoming Labour Party Prime Minister is poised to replace Ms Reeves in Number 11 Downing Street, according to reports, but the new Makerfield MP is already supporting her state pension plan.
Burnham's commitment to the triple lock
Mr Burnham has recently reaffirmed the government's commitment to the pension triple lock, which means the state pension rises each year by whichever is highest out of wage growth, inflation or 2.5 per cent. This policy, controversial since its implementation in 2011, was brought in by the Liberal Democrats and Conservative Party coalition government.
Angeline Ong, senior investment analyst at IG, said: "Burnham has boxed himself in on the triple lock. That promise looks locked in for this parliament. He also appears to back Rachel Reeves's plan to keep pensioners off income tax once their state pension rises above the frozen personal allowance of £12,570. In practice, that means millions of older people could be shielded from being quietly pulled into the tax system as their pension creeps up."
Impact on pensioners
The plan could affect up to three million pensioners who rely solely on the state pension. Mr Burnham committed to honouring Ms Reeves' promise during an interview with the I paper, ahead of becoming Prime Minister in mid-July.
Ms Reeves told Parliament: “People only in receipt of the basic or new state pension do not have to pay small amounts of tax through simple assessment from April 2027.” She also told Martin Lewis, the BBC and ITV star and Money Saving Expert founder, back in November: “In this Parliament they won’t have to pay the tax. Further on, I’m not able to make any commitments on that. We are looking at a simple workaround at the moment.”
Political context
Mr Burnham's backing comes as he prepares to take over as Prime Minister, succeeding Ms Reeves who is set to become Chancellor. The plan aims to prevent pensioners from being dragged into income tax as the state pension rises above the frozen personal allowance of £12,570.
