Pensioners will not benefit from the National Insurance reductions because they are already exempt from paying it. Many have private pensions as well as state support, tipping them over the £12,570 tax-free threshold or into higher tax bands.
The International Monetary Fund (IMF) welcomed the cuts to National Insurance that it described as being “aimed at incentivising work”.
A spokesman said Mr Hunt had spoken to managing director Kristalina Georgieva following the Budget and described the tax increases used to fund them, including abolishing non-dom status as “well-conceived revenue-raising measures”.
However, the IMF repeated a warning that tax rises would be needed to stabilise debt in the medium term.
While 78pc of the personal tax cuts announced in Mr Hunt’s Budget benefit the richest half of households, the Resolution Foundation said the richest fifth of households would in fact lose an average of £1,500 a year once all tax and benefit changes announced this parliament are taken into account.
Meanwhile, the poorest fifth of households have gained £840 a year. The Resolution Foundation’s analysis found that low income households today stand to benefit from more generous welfare payments compared to 2019.
Support for millennials and younger people announced in the Budget includes keeping more of their £24-a-week benefit for first children after Mr Hunt raised the income threshold at which the state starts to claw back payments to £60,000.
Changes to Universal Credit this parliament means lower income young people keep more of their benefits if they work more.
Meanwhile, the Resolution Foundation said that the Government’s failure to raise tax thresholds in line with inflation meant the average taxpaying pensioner would be £1,000 a year worse off compared to the start of this parliament.
The think tank said: “In total, the policy will have increased taxes for pensioners by around £8bn, a significant portion of the net personal tax rise.
“It is clear that the pensioners’ incomes are set to fall the most as a result of policy changes made during this parliament.”
William Turner is a seasoned U.K. correspondent with a deep understanding of domestic affairs. With a passion for British politics and culture, he provides insightful analysis and comprehensive coverage of events within the United Kingdom.
