The shock scrapping of the age-related tax-free personal allowance was a blow to middle-income pensioners. From April next year the personal allowance will be frozen for those aged 65 or over.

The aim is to phase out the age-related allowance over the next few years, bringing it into line with the personal allowance that applies to all taxpayers.

It means the current allowance for people aged between 65 and 74 of £​10,500 and the allowance of £​10,660 for those 75 and over will be frozen until they reach parity with the allowance for those of working age.
Taxpayers who are 65 after April 6 next year will no longer get the age-related allowance. From that date they will get the same personal allowance as those of working age of £​9,205.

The move will see more than four million pensioners with an annual gross income of between £​10,000 and £​25,400 having more of their income taxed as the changes take effect.

Estimates suggest the average pensioner will be £​83 a year worse off in 2013-2014. The Exchequer’​s tax take from this measure is expected to be £​360 ​million next year, rising to more than £​1billion in 2015-2016.

Ros Altmann, director-general at over-50s insurer Saga, says the move is an ‘​outrageous assault on decent middle-class pensioners’​.
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