Labour ‘retirement tax hell’ as millions of pensioners to be ‘worse off’ under Starmer

Millions of pensioners will be dragged into “retirement tax hell” after Sir Keir Starmer condemned them to a future of taxman red tape.

The Labour leader refused to match Rishi Sunak’s promise to keep the poorest pensioners out of paying income tax.

It means at least two million struggling older people face having to deal with HMRC for the rest of their life to make the tax payments under the simple assessment system.

Chancellor Jeremy Hunt told the Daily Express: “Millions of pensioners will be worse off under Labour’s Retirement Tax.

“For the first time in history, it will drag pensioners whose only income is the state pension into paying tax for the first time.

“Not only will that make them poorer but it also means the administrative burden of suddenly having a tax assessment.

"Whilst Sir Keir Starmer sits on his personalised gold-plated pension, with its own law, Labour’s Retirement Tax will hit pensioners hard.”

Labour confirmed it will not match the Conservatives’ “triple lock plus”, which includes a tax break to stop them being dragged into paying income tax.

A Tory source said: “Labour's retirement tax will be administrative hell for ordinary pensioners.”

Silver Voices is launching its general election campaign “silver manifesto” calling for the parties to ensure there is “dignity in old age”.

Director Dennis Reed said: “It’s disappointing if the initial reaction from Labour is to rubbish the proposal.

“It’s a modest measure, we give a cautious welcome to it. We would prefer it if lower paid workers as well but it is as it is and hundreds of thousands of pensioners will potentially benefit from it.”

Baroness Altmann, former pensions minister said filling out tax returns will be an “administrative nightmare”.

She said: “By opposing this measure millions more pensioners - many living on no more than the state pension- will be at risk of having to fill in a self assessment tax form, which can be mind bogglingly difficult, or failing to fill one in and end up paying penalties.

“This issue is already upon us for those pensioners who have shared some of their tax threshold with their partner via the marriage allowance.

“Their tax free threshold is only £11,310 so the full new state pension is already higher and they will owe tax.

“This will be an administrative nightmare and Labour will have to deal with it sooner or later.”

Tories warned that 10 million pensioners will pay extra tax under the “Labour retirement tax”.

Some two million older people, whose only income is the state pension, face being dragged into paying tax for the first time.

Under the triple lock plus plan announced by the Conservatives, pensioners whose sole income is the state pension will never pay income tax because both the payment and the pensioner tax-free allowance will rise in line with the highest of earnings, wages or 2.5% in each year of the next Parliament.

It comes after two tax cuts for working age adults in the last two financial statements, when national insurance was cut by a total of four pence in the pound.

Prime Minister Rishi Sunak laid out the plans during a campaign visit to Staffordshire yesterday.

He said: “You can just look at what the last Labour Prime Minister did for pensioners and that was Gordon Brown.

“I think every pensioner remembers the 75p increase in the state pension and Gordon Brown's £100 billion tax raid on pensions.

“Today, it's clear that there's only one party in this election who's on the side of pensioners. There's only one party offering a tax cut for pensioners.

That's us - as well as protecting the triple lock which is currently going up by £900.

“Labour have said that they do not support our policy to raise a threshold and go back to what we used to have, which was an allowance for pensioners which will deliver them a tax cut.

“Labour oppose that. That means that under a future Labour government, pensioners on the state pension will start paying tax.

“But that's the reality of it. So a clear dividing line. Pensioners can remember what Gordon Brown did and they've heard today from Keir Starmer and Rachel Reeves that they will be taxed under a future labour government.

So it's a pretty clear choice in this election.

“I would deliver a secure future for pensioners because I believe that if you work hard throughout your life and put in, then you deserve dignity in retirement.

“And that's the type of country that I believe in. That's the type of country that I think most people believe in and today's policy demonstrates that.”

Shadow chancellor Rachel Reeves defended Labour’s refusal to match the triple lock plus pledge.

She told Sky News: “Well, I want taxes on working people and pensioners to be lower, but to be able to do that you've got to explain where the money is going to come from. And yesterday the Conservatives were using this pot of money to create a national service. Today they're saying they're going to use this money to cut taxes. The truth is the Tory sums just don't add up.”