![\"Pensioner\"\/](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/03\/pensioner.jpg\")
<\/p>\nMillions of pensioners could soon be drawn into the income tax system as the state pension sits just \u00a322 below the \u00a312,570 personal allowance threshold.<\/p>\n
Arjun Kumar, a PWC\u2011qualified accountant and founder of Taxd.co.uk, told GB News the situation could push large numbers of retirees into paying tax under current rules. <\/p>\n
\u201cThe risk isn\u2019t just significant; it\u2019s a mathematical certainty under the current rules,\u201d he said.<\/p>\n
He explained the issue reflects fiscal drag, where inflation lifts incomes while tax\u2011free allowances remain frozen, gradually pulling more people into the tax system.<\/p>\n
\u201cWith the state pension sitting just \u00a322 below the \u00a312,570 threshold for April 2026, we are right on the wire,\u201d he added.<\/p>\n
The tension exposes a potential clash between two government commitments: protecting pensioners from tax when their only income is the state pension and maintaining frozen thresholds to raise revenue.<\/p>\n
Ministers have repeatedly insisted pensioners relying solely on the state pension will not be required to pay tax, but Mr Kumar warned delivering such an exemption could prove difficult in practice.<\/p>\n
\u201cThe Government\u2019s promise to waive tax for those whose only income is the state pension is well\u2011intentioned, but in practice, it\u2019s an administrative minefield,\u201d he said.<\/p>\n
State pensioners could face a tax raid on their pots<\/p>\n
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Even small additional payments could technically push someone over the threshold.<\/p>\n
\u201cWhat happens to the pensioner who earns \u00a350 a year in interest from a modest savings account? Or someone who gets a tiny \u00a315\u2011a\u2011month payout from an old workplace pension?\u201d<\/p>\n
Such cases could bring people into the tax system despite the extra income being minimal, creating uncertainty for those already managing tight budgets.<\/p>\n
If tax were applied, Mr Kumar noted, it would reduce the income available to pensioners struggling with rising living costs.<\/p>\n
![\"\\u200bArjun](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/03\/u200barjun-kumar.jpg\")
Arjun Kumar said that payments are a “mathematical guarantee”<\/p>\n
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\u201cYou\u2019d be taking 20p in tax for every \u00a31 over the threshold from people who are already tracking every penny they spend on heating and groceries.\u201d<\/p>\n
He also warned retirees sitting just above the eligibility level for Pension Credit could face a \u201cdouble penalty\u201d, missing out on support such as council tax reductions or help with heating costs.<\/p>\n
Clear guidance, he said, is urgently needed. \u201cIf the Government waits until autumn to explain how this exemption works, millions of older people will spend the entire year worrying about whether they need to put money aside for a tax bill they might not even owe.\u201d<\/p>\n
Mr Kumar outlined several steps for those approaching retirement, including maximising ISA contributions\u2014since income generated within ISAs does not count towards taxable income\u2014and checking National Insurance records to ensure they have the 35 qualifying years needed for the full state pension.<\/p>\n
![\"DWP\"\/](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/03\/dwp.jpg\")
The tension highlights a clash between two Government pledges<\/p>\n
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For people still working at pension age, deferring the state pension could help avoid stacking multiple sources of taxable income in the same year.<\/p>\n
The broader issue, he argued, is the growing tension between tax policy and pension policy.<\/p>\n
\u201cWe have a pension policy designed to protect older people from the rising cost of living, running headfirst into a tax policy designed to quietly squeeze more revenue out of the public,\u201d he said.<\/p>\n
\u201cAn ageing population needs simplicity, predictability and a joined\u2011up system. Right now, we have the exact opposite.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Millions of pensioners could soon be drawn into the income tax system as the state pension sits just…\n","protected":false},"author":2,"featured_media":520288,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[64,63,99,186,187,4363,184,185,9876,4961],"class_list":{"0":"post-520287","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-au","9":"tag-australia","10":"tag-business","11":"tag-finance","12":"tag-money","13":"tag-pensions","14":"tag-personal-finance","15":"tag-personalfinance","16":"tag-state-pension","17":"tag-tax"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/520287","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=520287"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/520287\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/520288"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=520287"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=520287"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=520287"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}