The amount people can earn before paying income tax has been frozen at £12,570 since 2021 – but state pension payments have continued to rise each year pushing some people over the threshold
(Image: Catherine Delahaye via Getty Images)
Pensioners with modest private pensions could be hit with a tax bill from HMRC.
This comes as frustration grows over the frozen tax bands, which are resulting in an increasing number of pensioners having to pay income tax.
The personal allowance – the threshold at which people start paying income tax – has remained stagnant at £12,570 since 2021.
However, state pension payments have continued to increase annually, pushing millions towards or beyond this threshold.
While the state pension alone isn’t sufficient to exceed the £12,570 mark, a small private pension or other forms of income can push households past this total.
This is precisely what’s happening to thousands more elderly individuals each year, with campaigners criticising the system as unjust.
The state pension could increase by as much as £550 next year, nudging more people into the tax-paying bracket.
Tax bands are currently set to remain frozen until 2028.
Conservative leader Kemi Badenoch has accused Labour of imposing a “retirement tax” on pensioners. She recently stated: “Under Labour, millions of our poorest pensioners face being dragged into income tax for the first time ever.”
She questioned: “Does the Prime Minister think it is right that struggling pensioners should face a retirement tax?”.
In response, Keir Starmer said: “We will stick to our manifesto commitments, we will stick to our fiscal rules.
“This is a language they (the Conservatives) don’t understand. That’s what got us into the problem in the first place.”