Latest news with #DavidBrooks
Daily Mirror
a day ago
- Business
- Daily Mirror
Hundreds of thousands of pensioners face 'new' tax this year
The Chancellor is under fire as hundreds of thousands more pensioners are dragged into the income tax net, thanks to the triple lock and the personal allowance freeze Soaring numbers of pensioners are set to get caught in the income tax net this year – without feeling any richer – as HMRC stats indicate 420,000 more pensioners will pay the tax in 2025-26. Nearly 8.7 million over-65s will be paying income tax, marking a 5% hike from the previous year. The issue stems from the ex-Tory government's move to anchor personal tax allowances at £12,570 from 2021 all the way through to possibly 2028 – a decision that Chancellor Rachel Reeves upheld in her inaugural Budget. This worrying threshold freeze pairs with state pension values climbing almost 30% thanks to the 'triple lock', and that means a substantial number of retirees will now hand over basic-rate tax cash at 20%, despite relying solely on state support. Policy expert David Brooks from Broadstone cautioned in The Times: "While the country's demographic shift naturally increases the number of pensioners liable for income tax, fiscal drag is unequivocally pulling hundreds of thousands more into the income tax bracket each year." In 2021, the full new state pension was at £9,332.20. By April, it had increased to £11,973 - just £597 short of the frozen personal allowance. The Office for Budget Responsibility forecasts that within two years, it will rise again to £12,885.50, surpassing the tax-free threshold by £315.50. Wealth manager Quilter has warned that pensioners receiving the full entitlement - after 35 years of National Insurance contributions - would be taxed £63 a year on their pension alone, without considering any other income such as savings, dividends or rental returns. Critics have long contended that this so-called 'fiscal drag' is a method for the Treasury to gather billions, without outright raising tax rates. Meanwhile, millions of workers are also being pulled into higher tax brackets. The number of Brits paying 40% higher-rate tax is predicted to reach 7.1 million this year, up from 5.1 million in 2022-23 - a 39% increase. Even more remarkable perhaps is the surge in those paying the 45% top rate: 1.23 million people will surrender nearly half their earnings above £125,140 this year, more than double the 570,000 from just three years ago. The number of basic-rate taxpayers has also risen - from 28.8 million in 2022 to 30.8 million today. Neela Chauhan, partner at accountancy firm UHY Hacker Young, said: 'Though it might seem equitable for higher earners to be paying more tax, there are real concerns over the impacts of placing an ever higher tax burden on high earners. 'Increasing the tax burden too high could push these people to leave the country or deter talented people from moving to this country. There are already concerns of a 'brain drain' in the UK.' Rachel Reeves has said the freeze on tax thresholds will end in 2028, however she is now under pressure to continue it through to 2030 in order to head off a black hole in government finances and stick to her fiscal rules.
Times
2 days ago
- Business
- Times
An additional 420,000 pensioners set to pay income tax this year
Hundreds of thousands more pensioners will pay income tax in retirement this year as they fall victim to a deep freeze on tax thresholds. About 420,000 more people over state pension age will pay income tax in 2025-26, bringing the total to 8.7 million, according to data from HM Revenue & Customs. The rise is a result of consecutive increases to the state pension and a long-running freeze on income tax thresholds, which began in 2021 but is set to continue until at least 2028. Millions of pensioners and workers have been dragged into a higher tax bracket as their income rises because of the freeze, a process known as fiscal drag. • Two million to be hit by 'stealth tax bombshell' by end of decade David Brooks, the head of policy at the consultancy firm Broadstone, said: 'While the country's demographic shift naturally increases the number of pensioners liable for income tax, fiscal drag is unequivocally pulling hundreds of thousands more into the income tax bracket each year.' The amount of income you can receive each year before paying tax has been stuck at £12,570 since 2021. The full new state pension has increased from £9,332.20 to £11,973 over the same period. This means that those with other sources of income like dividends, rental payments and cash could easily be tipped into paying tax. The state pension is protected by the so-called 'triple lock', which ensures it rises each year by the highest of average earnings growth, inflation, or 2.5 per cent. It was designed to shield pensioners from the rising cost of living, but its success is somewhat of a double-edged sword — the state pension is on track to soon be enough to exceed the 20 per cent basic-rate tax threshold. • Johanna Noble: Tax is a small price to pay for a good state pension The Office for Budget Responsibility has predicted that by April 2027 the full new state pension will be worth £12,885.50 — £315.50 over the £12,570 personal allowance. Pensioners who had paid national insurance contributions for 35 years to qualify for the full state pension would then have to repay 20 per cent of that £315.50, losing £63, according to Quilter, the wealth manager. Last year, the Conservatives pledged a 'triple lock plus', in which the personal allowance for pensioners would rise in line with the highest of earnings, inflation, or 2.5 per cent, mirroring the protection afforded to the state pension. At the time, Labour dismissed the proposal as lacking credibility. More than seven million people are expected to pay the higher rate of income tax, at 40 per cent, this year, up from just over 5.1 million in the 2022-23 tax year. The number of people paying the top rate of tax, 45 per cent, is expected to hit 1.23 million this year, more than double the 570,000 who paid it three years ago. The number of basic-rate taxpayers has risen from 28.8 million to 30.8 million over the same period. • Is Britain a high-tax nation compared with other countries? Neela Chauhan, a partner at the accountancy firm UHY Hacker Young, said: 'Though it might seem equitable for higher earners to be paying more tax, there are real concerns over the impacts of placing an ever higher tax burden on high earners. 'Increasing the tax burden too high could push these individuals to leave the country or deter talented individuals from moving to this country. There are already concerns of a 'brain drain' in the UK.' The Treasury has been approached for comment.
Scottish Sun
2 days ago
- Business
- Scottish Sun
Warning for 420,000 people on the state pension being hit with tax bill for the first time – can you avoid it?
We reveal how you make the most of your cash to avoid paying income tax below TAXING TIMES Warning for 420,000 people on the state pension being hit with tax bill for the first time – can you avoid it? Click to share on X/Twitter (Opens in new window) Click to share on Facebook (Opens in new window) HUNDREDS of thousands of state pensioners are set to be stung with a tax bill for the first time. Fresh data from HMRC shows 8.7million people of state pension age or older will pay income tax on their retirement income in 2025/26. Sign up for Scottish Sun newsletter Sign up 1 State pensioners are facing paying income tax due to fiscal drag Credit: Getty This is a 420,000 rise compared to the previous financial year and a hike of 1.85million from 10 years ago (2015/16). The blow comes due to a combination of a rising state pension, under the Triple Lock, and frozen income tax thresholds - known as fiscal drag. The full new state pension is currently worth £11,973 a year while the personal allowance is £12,570, with the threshold frozen until 2028. The full new state pension amount on its own is not yet enough to breach the allowance. However, older people receiving income from other avenues like a private pension or job on top of a state pension can end up going over the threshold and having to pay tax. David Brooks, head of policy at leading independent consultancy Broadstone, said: "We would expect a growing number of pensioners to be liable for income tax as the country's demographic changes due to our ageing population. 'Fiscal drag, however, is also bringing hundreds of thousands more pensioners into paying income tax bracket every year as the frozen personal allowance thresholds combines with the Triple Lock-protected state pension. 'While perhaps personally frustrating for many pensioners, it reflects the nature of inflation linked occupational pensions and a Triple-locked state pension that continue to rise." It's not just people receiving income through a state pension and other streams who are set to pay income tax either. As the state pension rises under the Triple Lock, some relying solely on this could end up paying tax. What are the different types of pensions? The Triple Lock ensures the state pension goes up by whatever is highest out of inflation, 2.5% or wages. Previous forecasts by Deutsche Bank predict the Triple Lock will rise by £600 in April 2026 to £12,631. This would see someone on the full new state pension breach the personal allowance for the first time and having to pay tax. In May 2024, then Chancellor Jeremy Hunt said the income tax personal allowance would be frozen at £12,570 until 2028. The freeze was first put in place in 2021. In her first Budget in October that year, Chancellor Rachel Reeves had been widely expected to extend the freeze beyond 2028. The Sun asked the Treasury to comment. How to avoid paying income tax on your state pension There are a few tricks you can use to lessen the chances of being taxed on your income if you're a state pensioner. The first is by withdrawing from a private or workplace pension tactically. It's tempting to take out your whole private or workplace pension when you reach retirement and put it into a savings account. But do this and you'll end up paying income tax on any sitting in taxable accounts. Instead, you can actually take out 25% of the value of the pension tax-free. You can either do this as a lump sum or in smaller gradual amounts to top up your state pension without being taxed on it. A second way is by making the most of your ISAs as withdrawals from these types of accounts aren't subject to income tax. For example, if you withdrew 4% from a £100,000 ISA pot, your take home pay would be £4,000. How does the state pension work? AT the moment the current state pension is paid to both men and women from age 66 - but it's due to rise to 67 by 2028 and 68 by 2046. The state pension is a recurring payment from the government most Brits start getting when they reach State Pension age. But not everyone gets the same amount, and you are awarded depending on your National Insurance record. For most pensioners, it forms only part of their retirement income, as they could have other pots from a workplace pension, earning and savings. The new state pension is based on people's National Insurance records. Workers must have 35 qualifying years of National Insurance to get the maximum amount of the new state pension. You earn National Insurance qualifying years through work, or by getting credits, for instance when you are looking after children and claiming child benefit. If you have gaps, you can top up your record by paying in voluntary National Insurance contributions. To get the old, full basic state pension, you will need 30 years of contributions or credits. You will need at least 10 years on your NI record to get any state pension. Do you have a money problem that needs sorting? Get in touch by emailing money-sm@ Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories
The Sun
2 days ago
- Business
- The Sun
Warning for 420,000 people on the state pension being hit with tax bill for the first time – can you avoid it?
HUNDREDS of thousands of state pensioners are set to be stung with a tax bill for the first time. Fresh data from HMRC shows 8.7million people of state pension age or older will pay income tax on their retirement income in 2025/26. 1 This is a 420,000 rise compared to the previous financial year and a hike of 1.85million from 10 years ago (2015/16). The blow comes due to a combination of a rising state pension, under the Triple Lock, and frozen income tax thresholds - known as fiscal drag. The full new state pension is currently worth £11,973 a year while the personal allowance is £12,570, with the threshold frozen until 2028. The full new state pension amount on its own is not yet enough to breach the allowance. However, older people receiving income from other avenues like a private pension or job on top of a state pension can end up going over the threshold and having to pay tax. David Brooks, head of policy at leading independent consultancy Broadstone, said: "We would expect a growing number of pensioners to be liable for income tax as the country's demographic changes due to our ageing population. 'Fiscal drag, however, is also bringing hundreds of thousands more pensioners into paying income tax bracket every year as the frozen personal allowance thresholds combines with the Triple Lock-protected state pension. 'While perhaps personally frustrating for many pensioners, it reflects the nature of inflation linked occupational pensions and a Triple-locked state pension that continue to rise." It's not just people receiving income through a state pension and other streams who are set to pay income tax either. As the state pension rises under the Triple Lock, some relying solely on this could end up paying tax. What are the different types of pensions? The Triple Lock ensures the state pension goes up by whatever is highest out of inflation, 2.5% or wages. Previous forecasts by Deutsche Bank predict the Triple Lock will rise by £600 in April 2026 to £12,631. This would see someone on the full new state pension breach the personal allowance for the first time and having to pay tax. In May 2024, then Chancellor Jeremy Hunt said the income tax personal allowance would be frozen at £12,570 until 2028. The freeze was first put in place in 2021. In her first Budget in October that year, Chancellor Rachel Reeves had been widely expected to extend the freeze beyond 2028. The Sun asked the Treasury to comment. How to avoid paying income tax on your state pension There are a few tricks you can use to lessen the chances of being taxed on your income if you're a state pensioner. The first is by withdrawing from a private or workplace pension tactically. It's tempting to take out your whole private or workplace pension when you reach retirement and put it into a savings account. But do this and you'll end up paying income tax on any sitting in taxable accounts. Instead, you can actually take out 25% of the value of the pension tax-free. You can either do this as a lump sum or in smaller gradual amounts to top up your state pension without being taxed on it. A second way is by making the most of your ISAs as withdrawals from these types of accounts aren't subject to income tax. For example, if you withdrew 4% from a £100,000 ISA pot, your take home pay would be £4,000. How does the state pension work? AT the moment the current state pension is paid to both men and women from age 66 - but it's due to rise to 67 by 2028 and 68 by 2046. The state pension is a recurring payment from the government most Brits start getting when they reach State Pension age. But not everyone gets the same amount, and you are awarded depending on your National Insurance record. For most pensioners, it forms only part of their retirement income, as they could have other pots from a workplace pension, earning and savings. The new state pension is based on people's National Insurance records. Workers must have 35 qualifying years of National Insurance to get the maximum amount of the new state pension. You earn National Insurance qualifying years through work, or by getting credits, for instance when you are looking after children and claiming child benefit. If you have gaps, you can top up your record by paying in voluntary National Insurance contributions. To get the old, full basic state pension, you will need 30 years of contributions or credits. You will need at least 10 years on your NI record to get any state pension. Do you have a money problem that needs sorting? Get in touch by emailing money-sm@
Atlantic
17-06-2025
- Politics
- Atlantic
We Need to Reckon With Ronald Reagan's Legacy
Everything We Once Believed In I didn't wake up today thinking I would write a thank-you to The Atlantic, but after reading David Brooks's 'Everything We Once Believed In,' I feel compelled. For so long, I've felt the pain and embarrassment of seeing my country forsake its honor while most of the people I used to see as political allies cheered—but I've never been able to express it adequately. Brooks put my feelings to words. His article gives me hope that our nation can and likely will be made stronger over time. Tom Dornish I always look forward to David Brooks's articles and often agree with much of what he writes. However, his continued lionization of the Reagan administration—and Ronald Reagan himself—strikes me as an odd blind spot. Brooks's critiques of progressive missteps, including those outlined in ' How the Ivy League Broke America ' and reiterated in his recent article, have given me much to reflect on. But I don't believe Brooks has paid sufficient attention to the role the Reagan Revolution played in undermining the American dream and weakening the working class. Consider Reagan's massive tax cuts, which drove a marked rise in income inequality. His firing of unionized air-traffic controllers dealt a major blow to organized labor, and his divisive racial rhetoric—his use of the infamous 'Welfare Queen' trope; his 'States' Rights' speech in Philadelphia, Mississippi—feels in keeping with the reactionaries of today whom Brooks criticizes. This doesn't diminish the legitimate critiques of the left. But a fuller reckoning with Reagan's legacy—by Brooks, especially—would offer a more balanced and persuasive analysis. It might also help his critique of liberal excesses land with readers who see Reagan not as a paragon of leadership, but as a key architect of our current inequality and division. Adam Udell Downingtown, Pa. It's not every day that a public intellectual castigates himself for a 'pathetic' lack of foresight, and David Brooks is to be commended for doing so. I was struck, though, that nowhere in his discussion of 19th- and early-20th-century reform movements, nor in his call for a 'Whig-like working-class abundance agenda,' does he mention labor unions. As Brooks surely knows, there would never have been a middle class in the United States if unionized workers hadn't fought to obtain a fairer share of the fruits of their labor. I am a proud union member at The New Yorker. Any viable 'working-class abundance agenda' must recognize and celebrate workers' right to organize in the workplace. Douglas Watson New York, N.Y. I did not attend an elite university of the kind David Brooks describes until graduate school. But I never experienced anything that would have ignited the bitterness that Brooks diagnoses in the reactionaries. I don't think it's fair to blame universities for our current political predicament. My higher-education experiences promoted ethical behavior and instilled in me a commitment to serve society with the knowledge I gained. Barbara K. Sullivan-Watts Kingston, R.I. David Brooks's 'Everything We Once Believed In' was characteristic of all his work: insightful, and chastening but hopeful. I wish I shared his optimism that conservatism may yet find its way back. I think Brooks may misunderstand the ascendant right. Although he correctly identified its source in the snark of The Dartmouth Review, the ascendant right is anything but reactionary—it is triumphalist. Triumphalism is the kissing cousin of nihilism. Those of us who joined the conservative movement in the late '70s and early '80s had read our Edmund Burke too well to imagine conservatism sweeping away all before it to establish a conservative utopia. Indeed, we were conservatives precisely because we believed there was no such thing: Here we have no abiding city. We were a distinct minority fighting an uphill battle that we could never truly win. Those who joined the movement during the second Reagan administration and later were, I think, more attracted to power for its own sake. That is what we are seeing today. Brooks fails to properly blame conservatives for the rise of this triumphalist right. Conservatism is institutionalist, but the one institution we neglected in the '90s was the most important of all: the family. We got distracted by the culture wars and ignored the economic challenges that families faced. We were reading Milton Friedman when we should have been reading Pope Leo XIII. If the triumphalist right has seized control of conservatism, then we conservatives have only ourselves to blame. Rockland, Mass. I am genuinely heartened by the constructive honesty in David Brooks's mea culpa. Still, after reading through his article several times, I am left with the sense that he has not yet thoroughly plumbed the questions his reflections raise. Why didn't Brooks see this coming? Did conservatives in the 1980s really think that reactionaries would simply pave the way for the conservative agenda and then allow themselves to be shunted aside? Perhaps conservatives then, as now, saw themselves as working with the lesser of two evils. To bring about the civic renewal Brooks hopes for, however, they will need to fully separate themselves from the reactionaries and focus again on the public interest. In 1895, an article in The Atlantic described a group of politicians called the 'mugwumps,' who worked to free themselves from party affiliations and focused on what was best for the country, to significant effect. The mugwumps, it noted, 'form a class, never a large one, of persons who possess the power of seeing fairly the opposite sides of a question, and who lack the barnacle faculty of sticking tight to whatever one is attached, whether it be the steadfast rock or the restless keel.' If just a handful of members of Congress from both parties were willing to act in a similar manner, the rebirth Brooks hopes for might actually become a reality. I applaud David Brooks's essay on not foreseeing the current 'conservative' takeover of the country. What I don't share with Brooks, though, is his optimism regarding the United States' ability to recover. Although he cites numerous historical examples of nations that bounced back after disaster, there is one variable that wasn't present in those cases: climate change. The Trump administration has moved to gut decades-old environmental regulations, as well as federal expertise and oversight. It has eliminated funding for climate action and doubled down on fossil fuels. This means that even our current, arguably modest efforts to reduce carbon emissions are being reversed, potentially making it impossible to prevent catastrophic climate change. Once this happens, the wildfires, floods, and extreme weather of recent years will seem like paradise. So while the United States as a democracy may eventually recover, it will likely be too late for our planet. Michael Wright Glen Rock, Pa. Behind the Cover In this month's cover story (' Witness '), Elizabeth Bruenig describes her experience watching executions during her years of reporting on the death penalty. What she has seen has not altered her conviction that capital punishment must end, but, as she writes, 'it has changed my understanding of why.' The death penalty promises justice, or at least vengeance, but it forecloses the possibility of mercy. For our cover, The Atlantic 's creative director, Peter Mendelsund, painted an image of the corridor leading to an execution chamber, and a prisoner lying prone on the table within it. — Paul Spella, Senior Art Director
