Reform of pension tax relief
This briefing outlines the current system of pension tax relief and covers the main areas of debate about future reform.
Benefits and tax credits that are linked to inflation rise by 0.5% in April 2021, while the triple lock delivers a 2.5% increase to the Basic and New State Pension. Temporary uplifts to Universal Credit and Working Tax Credit, worth £20 per week, are set to lapse in April 2021 - the Government says it will "look at the economic and health context before making any decisions" about further support for low-income families during the coronavirus crisis.
Benefits Uprating 2021 (2 MB , PDF)
This note sets out the main benefit and tax credit rates that have been announced for the 2021/22 financial year.
Inflation-linked benefits and tax credits will rise by 0.5%, in line with the Consumer Prices Index (CPI) rate of inflation in September 2020.
The Universal Credit standard allowances and the Working Tax Credit basic element have reverted to being set in line with the usual annual uprating review and do not retain the temporary £20 per week uplift that was added in 2020/21 as part of a package of welfare measures introduced during the coronavirus outbreak. In response to calls for this uplift to be continued into 2021/22, the Government has said that it will “look at the economic and health context before making any decisions” about how best to support low-income families.
The Basic and New State Pensions continue to be uprated in line with the triple lock – that is, by the highest of the increase in earnings, price inflation (as measured by the CPI) or 2.5%. For the purposes of the 2021/22 uprating, the 2.5% minimum was the highest of these three benchmarks, meaning that:
The Pension Credit standard minimum guarantee (delivered by the Guarantee Credit) will rise by 1.9% to enable the cash increase in the full Basic State Pension to be passed through to Pension Credit recipients.
Benefits Uprating 2021 (2 MB , PDF)
This briefing outlines the current system of pension tax relief and covers the main areas of debate about future reform.
A look at how UK pensions compare with those in other countries. The note compares the UK state pension with similar systems in Europe and goes on to look more broadly at the structural differences in the sources of pensioner income across economically advanced countries.
Explore constituency-level data on people claiming Universal Credit in Great Britain using our interactive dashboard.