Clause 2
Finance Bill
12:45 pm
Jane Kennedy (Financial Secretary, HM Treasury; Liverpool, Wavertree, Labour)
Personal allowances provide for a portion of income on which no tax is due. Older individuals—those aged 65 to 74, and those aged 75 and over—are entitled to higher personal allowances; as the Committee will be aware, they are known as age-related allowances. Clause 2 sets the personal allowances for 2008-09 for individuals aged 65 to 74 at £9,030 and for those aged 75 and over at £9,180.
The tax Acts provide that all personal allowances are increased by indexation each year. The clause overrides the statutory indexation of the age-related allowances, increasing the allowances by £1,180 over indexation. That will give more support to older people, and it will take 600,000 pensioners out of income tax—a point that was celebrated by the pensioners aged over 65 that I met in my constituency, where I have spent a considerable time over recent weeks.