Chancellor Rachel Reeves’ Budget introduced a raft of tax changes and financial measures that will significantly affect the finances of older people, and unfortunately not for the better.
While we welcome confirmation that the triple-locked state pension will rise by 4.8 per cent from April 2026, some more relief on energy bills, and measures that will lift children in particular out of poverty, there is still a lot in the Budget that will poorly impact older people for years to come.
Chief among these, is the extended freeze on tax thresholds, the point at which you start paying tax, until 2031.
For those supplementing retirement income with savings or a small occupational pension, this ‘fiscal drag’ is likely to result in higher tax bills and reduced disposable income as they get pushed into paying tax for the first time.
The three-year extension to the freeze will effectively wipe out much of the benefit of any rise in the state pension.
The real disappointment in the Budget, is that the ‘broad shoulders’ the Chancellor said would be made to deliver for the economy are nowhere to be seen, apart from the so-called ‘mansion tax’ which is a drop in the ocean.
The End Fuel Poverty Coalition (EFPC), which includes the NPC, welcomed the modest reduction in energy bills announced in the Autumn Budget, acknowledging that any decrease is positive for households facing continued high costs.
The government estimates their actions will reduce energy costs by £150 next April.
However, the EFPC strongly criticised the decision to scrap the national home insulation scheme and cut wider efficiency funding, warning this could leave millions in cold, damp homes for years.
They highlighted that the projected bill reduction still leaves costs significantly above pre-crisis levels and expressed disappointment at the lack of a social tariff to support the most vulnerable.
The EFPC called for more ambitious government action, including energy pricing reforms, targeted support, a new fuel poverty strategy, and increased investment in home upgrades, while noting concerns over a significant future shortfall in energy efficiency funding.
Alongside tax rises, the government’s aim to increase fiscal headroom has raised concerns about future funding for the NHS and social care with increasing privatisation and nothing circulating in the UK economy because profits are in offshore banks.
If spending cuts or insufficient allocations occur, older people may face reduced access to vital care services and support.
Already there are patients in hospital who could be discharged, but there is no service available to ensure they are safe and cared for.
Meanwhile, persistent inflation and rising living costs will disproportionately impact those on fixed incomes, such as pensioners, especially if state pension increases fail to keep pace with inflation.
Note, the State Pension will rise by 4.8 per cent in April 2026. The full new State Pension (post 2016 retirees) to £241.30 per week, an increase of about £575 per year. The full basic (old/pre-2016 retirees) State Pension is expected to rise to £184.90 per week. An increase of £8.45 per week, an annual increase of £439.40.
Happy Christmas.
Rodney Sadd
Crowland
