Kwarteng and Truss must end pensioner stealth tax raid now – ‘stop before it’s too late’ | Personal Finance | Finance

Former Chancellor Rishi Sunak knew what he was doing when he announced that from April 2023 retirees would be paying Social Security from their earnings. Worse would have followed if he had still had his way.

Millions of retirees were cleverly dragged deeper into the tax system, and more fees would inevitably follow.

Chancellor Kwasi Kwarteng and Prime Minister Liz Truss must now cancel his plans because soon it will be too late.

On Friday, Kwarteng will stand up in parliament and announce his emergency “mini-budget.”

This aims to boost the economy by cutting taxes and boosting consumer spending and business growth.

As we recently reported, it looks set to reverse April’s Social Security hike, which would give a boost to more than 30 million workers.

This should raise £12billion a year to clear NHS Covid backlogs and fund social care.

It raised the NI rate by 1.25 percent to 13.25 percent, but it also gave retirees a thorn in their tail.

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From April next year, the 1.25 percent levy will be extended to any income they earn after they reach statutory retirement age.

This was a radical change, because in the past pensioners did not have to pay NS at all, even if they worked well into retirement.

With more than a million retirees now working past age 66, a surprising number would have been affected.

But this was only the beginning.

Now that Sunak had introduced the principle of charging retirees NI, the Treasury would inevitably benefit by increasing fees over time.

We’ve seen this with so many taxes, from income tax to stamp duty and many more. They’re launched at a low, low price in hopes people won’t complain, but over the years they’ll expand into something far more substantial.

I am confident that it would not have been long before retirees were paying NI at the full rate of 13.25 percent on their retirement income.

It would have been so easy for a future chancellor to stand up and say it’s unfair for retirees to pay NI lower than regular workers, and it would have been done.

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READ MORE: Social Security will be cut by 30million in the form of a tax hike on Thursday

With more Britons working past state pension age to pay the bills, this would have been a cash cow for the Treasury.

Liz Truss has campaigned for Conservative Party leadership on the tax cut platform, Friday is her chance to show she meant what she said.

Sunak turned stealth taxes into an art form. His decision to freeze the thresholds on income tax, capital gains tax, inheritance tax and the lifetime pension exemption for five years will net the Treasury Department tens of billions if not reversed.

But he was always a bit too smart for his own good, which may be why he lost to Truss in the leadership fight.

Kwarteng has to get rid of all this. The voters saw through it because they are the ones who will foot the bill.

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The scrapping of the NI hike will be good news for workers, but retirees will now be wondering if he will do the same for them on Friday.

Many were furious when they realized they would have to start paying Social Security on income.

They would also have been right to be suspicious as they are old enough to know exactly how the Treasury works.

Friday will be a big day for Kwarteng and also for the country. We’ll find out if he’s really serious about taxing less, or if he also tends to play the stealthy tax game.

Retirees will take a close look.

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