The Labour Chancellor Rachel Reeves delivers her Autumn Budget on Wednesday.
Major update over HMRC hiking Personal Tax Allowance for state pensioners
State pensioners have been issued an update over the Personal Tax Allowance “potentially” being hiked by the Labour Party government for them. The Labour Chancellor Rachel Reeves delivers her Autumn Budget on Wednesday.
There is speculation over tax rises, with state pensioners on course to pay tax for the first time thanks to the Triple Lock and rising payments. This, alongside with frozen tax bands, means they are at risk from having to pay the taxman.
Mike Ambery, retirement savings director at pension provider Standard Life, said: “There is a potential of an increase to the personal allowance for pensioners in line with the state pension.
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“Recent above-inflation increases in the state pension have raised concerns that it will soon exceed the personal allowance which has been frozen since 2021.
“Around one in eight pensioners rely solely on state provision in retirement and this group are likely to start paying income tax on state pension payments for the first time from April 2027.”
Mr Ambery said: “The state pension is funded by the workers of today, and its costs are set to swell over the coming years as more of our ageing population reach state pension age.
“Any future reforms or changes to the triple lock will need to carefully balance its long-term affordability with the sizable political risks associated with changing a policy affecting millions of people.
“The state pension age review alongside the revived Pensions Commission presents a unique opportunity to look at the pension system as a whole, including whether the triple lock continues to serve its intended purpose effectively.”
One pensioner said: “The State Pension of today is funded by the workers of today, that’s how it works.
“Where it falls down is that the workers of today do not Contribute enough and it will be the same for the next generation unless the contribution are raised. You only get out what you put in.
“Same with private pension, what you get depends on your contributions.”