In my latest column for BG Trust Online, I look at the aftermath of this year’s budget, and examine the outraged reaction of the babyboomers. Is it right for them to shoulder more of the burden in these austere times?
By iona bain
What will the legacy of this year’s Budget be? In the immediate aftermath, we witnessed thundering headlines in newspapers and howls of outrage on social networking sites. But what has really lingered is a spiky debate over what the so-called ‘baby boomer’ generation is entitled to.
Unless you’ve been living under a rock, you will have noticed that much of the mainstream media has focussed on a so-called Granny Tax that will hit over 4 million pensioners.
The higher tax-free allowances for those aged 65 and over have been frozen this month, and will be phased out altogether in April next year. After that, the average amount that will be lost by those turning 65 will be £285 a year (and £323 at most).
Many pensioners aren’t even claiming this extra cash from the taxman as they get older, whether it is apathy over form-filling or a conscious decision not to take money they don’t really need. It won’t affect those on an income of more than £30,000 (10% of the older population), and those who don’t pay tax (50%). So that middle bracket – about 40% – will miss out on slightly higher allowances than they previously hoped for.
The decision sparked a tidal wave of bad publicity. Newspapers have continued to print stories lamenting the “punishment” being doled out to savers of a certain age. Upset pensioners featured in case studies admit the amounts involved are relatively unimportant, but say that the “principle” is what really matters – they shouldn’t miss out on what is rightfully theirs, particularly when interest on their savings is so low and annuity rates are in free-fall.
Chancellor George Osborne tried to play things down, but the Treasury chief secretary, Danny Alexander, brazened things out, saying it was only right for the older generation to shoulder some of the burden in this age of austerity, particularly after enjoying so much prosperity in the past 40 years.