The Government has stood accused of an “outrageous stealth tax” after it emerged that more than four million pensioners will be worse off following changes to simplify the tax system unveiled in the Budget.

At present, people aged 65 or more are not taxed on the first £10,500 of their income, but this will be frozen for existing pensioners and from next April new pensioners will have a tax-free allowance of £9,205, bringing them into line with the general population.

About half of pensioners will be affected by the changes, which will save billions of pounds for the Government. The average loss for pensioners has been put at £80 a year, rising to £197 for those retiring from next April.

The move will save the Treasury £360 million next year, £670 million in 2014, more than £1 billion in 2015 and £1.25 billion in 2016.

Brian Bartle, 76, of Wibsey, a retired credit controller, said while he was not too upset with most of the Budget although the decision to scrap the income tax breaks for the over-65s will leave him and his wife Pamela out of pocket in years to come. He said: “It doesn’t make it really good looking at all.

“It will affect me in the long run – in a couple of years’ time we will lose out with it because of the change to the income tax.

“At the present we are okay but in maybe two years’ time we could be worse off with that allowance, but on the other hand it just depends on what happens in the meantime.

“Things are not looking good for ten years, so they say.”

A statement from the Treasury said: “We are taking a decision that the best way to help pensioners is through the triple lock, guaranteeing increases in the state pension.

“There is a goal of a simpler tax system and a simpler personal allowance system.”

Mr Bartle said he was also disappointed with the decision to cut the 50 per cent tax rate for the biggest earners. He said: “It means millionaires are tens of thousands of pounds a year better off.

“He’s tried to tackle the tax-dodgers but the bankers seem to get away with it again. If he had tackled the fuel tax and done something to alleviate it, which I’m sure they would have been able to do, it would have been better.”