Pensioners who have lost out under the Government’s removal of the extra personal tax allowance for those turning 65 after 5 April 2013 will feel the full brunt of the change when they start paying care home and other fees, warns ACCA (the Association of Chartered Certified Accountants) as MPs debate the issue in Parliament today (Monday 29th April).The global body for professional accountants has highlighted that regions in the UK with the lowest discretionary income, such as Northern Ireland which is 53% lower than the UK average*, will be the hardest hit.Having secured 114,464 signatures, pressure groups have forced a debate in the House of Commons on Monday (29th April) on the tax freeze which came into effect on the 5th April this year.In the 2012 budget George Osborne announced he was axing the higher tax allowance which enabled pensioners to earn an extra £3,000 before paying income tax. This now means that millions of people will not have the same level of annual income as they had expected, undoubtedly affecting their financial planning as they approach retirement age. 

Commenting on the proposed policy, Brian McGuire ACCA Ulster Network, said, “A policy that dictates how much tax you pay based on when you turn 65 is unfair. Anyone turning 65 after April 5 2013 has to pay £259 a year more than those who turned 65 before that cut-off date. Available means to pay doesn’t seem to come into play. 

“People spend most of their lives planning finances for retirement. Taking away the allowance for new and future pensioners is like pulling the rug from under their feet. Many will have to review their finances with an accountant, having based their retirement finances on the allowance being available. For a retired couple, this means the loss of £500 a year or £10,000 over their retried lifetime. When you factor in the rising cost of living, it will be sorely felt by many households across the UK. 

“Older taxpayers are already being squeezed on a number of fronts. Nursing home fees are rising with some pensioners having little choice but to sell their homes or other assets to pay for care, with many seeing smaller increases to both their occupational pension, and the second state pension (S2P) as both are linked to the Consumer Prices Index, rather than the higher Retail Prices Index. Other areas were pensioners have been hit include the level of winter fuel allowance reduced from £250 to £200, while those aged over 80 have seen this benefit cut from £400 to £300. 

“There are some regions within the UK where this policy will be particularly felt.  For example the discretionary household income in Northern Ireland is £77 per week compared to the UK average of £146*, so the realisation of this policy is likely to have a varying impact on a regional basis,” concluded Brian. 

“ACCA is calling on the Government to listen to those putting the case forward in the House of Commons on the potential impact of this policy and urges them to review and consider the detrimental effect it would have on many struggling pensioners throughout the length and breadth of the UK,” said Chas Roy-Chowdhury, ACCA head of taxation. 

ENDsFor further information please contact Shane Finnegan on 028 9066 3000Notes to Editors

1. *ASDA Income tracker December 2012

2. ACCA (Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.3. There are over 20,000 members and students in Ireland.4. We support our 154,000 members and 432,000 students in 170 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. We work through a network of over 80 offices and centres and more than 8,400 Approved Employers worldwide, who provide high standards of employee learning and development. Through our public interest remit, we promote appropriate regulation of accounting and conduct relevant research to ensure accountancy continues to grow in reputation and influence.5. Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. We believe that accountants bring value to economies in all stages of development and seek to develop capacity in the profession and encourage the adoption of global standards. Our values are aligned to the needs of employers in all sectors and we ensure that through our qualifications, we prepare accountants for business. We seek to open up the profession to people of all backgrounds and remove artificial barriers, innovating our qualifications and delivery to meet the diverse needs of trainee professionals and their employers.