Wealthy pensioners face £2,500 bill under a suspected income tax raid from the Labour Party Chancellor Rachel Reeves.
State pensioners face ‘grossly unfair’ HMRC letter demanding £2,500
State pensioners face being hit with a £2,500 bill from HMRC after November – if they are wealthy. Wealthy pensioners face £2,500 bill under a suspected income tax raid from the Labour Party Chancellor Rachel Reeves.
The Chancellor is understood to be considering a 2p rise in income tax. It would mean almost nine million state pensioners being handed a higher tax bill, including 124,000 who pay the additional 45p income tax rate.
8.8 million state pensioners would be forced to pay more tax, according to HMRC figures revealed in a Freedom of Information request by pension consultancy LCP.
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Of those, 124,000 are additional rate taxpayers earning £125,140 or more. As the £12,570 tax-free allowance is removed for anyone reaching that level of income, they pay 20 per centc tax on their first £50,270 and then 40 per cent up to £125,140.
A rise of two percentage points would generate an extra bill of £2,502.80. Their earnings over £125,140 would also be taxed at 47 per cent.
Adam Cole, of wealth management firm Quilter, said: “With fiscal drag pulling more retirees into higher bands, the Budget could tighten the squeeze on affluent pensioners even further.
“However, while Labour pledged not to raise the main rates of income tax on working people in its manifesto, a change like this may prove more palatable rather than a messy mix of tweaks to a variety of taxes or stealth changes around the edges.”
David Luxton, of pensioner pressure group Later Life Ambitions, said it would be “grossly unfair” to impose a 2p income tax hike on retirees.
He added: “Many in later life live on a fixed income, and this kind of broad increase fails to recognise that pensioners often face rising costs. It effectively penalises people with an extra charge for ageing.
“Pensioners have paid their dues through a lifetime of work and taxation. Asking them to shoulder yet another rise, when many already pay the highest rate, is unjust. Those who’ve contributed the most shouldn’t be punished again simply for having saved responsibly.”
A Treasury spokesman said: “We do not comment on speculation around future changes to tax policy.”