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Age Concern's Director General, Gordon Lishman, said:

"This looks like very good news for those pensioners who were set to lose out as a result of the abolition of the 10p tax rate. It makes sense for the compensation to be paid through the tax system and increasing personal allowances is by far the fairest and most effective way to do this. Today's announcement, which means that even more older people have been taken out of the income tax system, is very welcome."   

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Notes to editors

• As a result of last year's Budget changes (which came into effect on 6 April 2008), some older people are actually better off and a further 580,000 people aged 65 and over have been taken out of the income tax system altogether.