Martin Lewis questioned Rachel Reeves about everything from the state pension to cash ISAs – and revealed he had secured a special commitment from the Chancellor
Consumer champion Martin Lewis says he has secured a commitment from Chancellor Rachel Reeves for many low income pensioners after one of the big announcements in the Budget.
Ms Reeves confirmed that the new full state pension will rise by 4.8% next April to £12,548 a year. But that will take it within a whisker of the standard personal allowance of £12,570, above which people normally have to start paying income tax.
There have been concerns that, if an older person on the state pension had any other income, it would take them over the threshold and they would have to pay income tax and have the hassle of filling in an annual tax return.
But questioned by Mr Lewis for his ITV show last night, the Chancellor confirmed that those whose only income is the state pension will not pay income tax.
She said: “If you just have a state pension and you don’t have any other pension we are not going to make you fill in a tax return. I make that commitment for this parliament.” Crucially, she also confirmed: “They won’t have to pay the tax,” and added: “We are working a solution so we are not going after tiny amounts of money.”
Mr Lewis welcomed the clarity over the tax point, adding: “It is worth spreading the word on that.”
However, the founder of Moneysavingexpert.com was more critical of the government’s decision to cut the tax-free cash ISA limit from £20,000 to £12,000 from April 2027 for most people, although it will remain for those aged 65 and over.
Labour says it wants to encourage savers to put their money into stock and shares ISA instead, to help UK listed companies. Mr Lewis said: “I think this is the wrong to do it there are other ways to encourage people to invest instead.”
Ms Reeves told him: “Ninety per cent of people with savings will still have no tax on their savings. At the same time we are changing the advice and guidance rules. I have worked with the Financial Conduct Authority to get these changes in. A number of the ISA providers have already said they will be promoting investment in UK equities which is great boost for businesses starting up and scaling up and listing in Britain.”
Mr Lewis said: “I agree with the Chancellor’s diagnosis of the problem but I just don’t agree with the solution she has come up with.”
During the Budget special of The Martin Lewis Money Show, he also had advice around energy prices after the Chancellor announced measures that she claimed would knock an average £150 off the average bill.
The temporary cut comes from ditching two add-ons to bills, including a discredited home insulation scheme. Mr Lewis welcomed the move, though added: “I would have preferred it have come off the standard charge then everyone gets the same reduction but it is better than nothing.”
He also urged those on a standard tariff to consider switching to a fixed rate deal instead, stressing: “I would be absolutely not be waiting I would be getting the good saving now.
There have been concerns that those on fixed deal will not benefit from the £150 saving next year. But Mr Lewis also interviewed Energy Secretary Ed Miliband, who said: “We are determined that people feel the benefit, including those on fixed rates and we are going to be working with the companies and having discussions with them confidentially in advance. We are determined for those benefits are passed to those people on fixed rates.”
