Alan Perkins faces being caught on the wrong side of Labour Party Chancellor Rachel Reeves’s policy.
State pensioners relying solely on state pension sent £800 tax bills from HMRC
State pensioners relying solely on their state pension could face having to pay HMRC £800. Retiree Alan Perkins faces being caught on the wrong side of Labour Party Chancellor Rachel Reeves’s ‘cliff-edge’ tax exemption policy.
After her Autumn Budget, Ms Reeves revealed those who rely solely on the state pension wouldn’t pay income tax when it rises above the personal allowance in 2027.
Mr Perkins, aged 71, has no private pensions to his name – but is already taxed on his Department for Work and Pensions ( DWP ) payments. Mr Perkins is one of thousands of workers who paid into the state earnings-related pension scheme, more commonly known as Serps.
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Serps top-ups mean Mr Perkins gets an extra £90 a week, giving him an income of around £16,500 a year. His income is £4,000 above the personal allowance, which has remained frozen since 2021.
He said: “I’ve worked like a dog for all of my life. I worked stupid amounts of overtime to provide for my family. I would leave home at 6.30 in the morning and get in at 10.30 at night, and that was five days a week.
“On weekends I would work until about six o’clock and then I would do an evening as a minicab driver as well.
“Although we were all living in the same house, it meant I didn’t really see my children grow up much. And now I’m retired, they take tax out of it. I never thought anyone on a state pension would pay tax. I can’t get my head around it.”
“This mess started in 2021 when Rishi Sunak froze it. The tax thresholds should have gone up for everybody, and this is the consequence,” he added.
“But when I saw Rachel Reeves announce that people only on the state pension would be exempt, I thought big deal, I’m already paying it. Does she not realise there are people like me?”
Sir Steve Webb, a former pensions minister, told the Telegraph: “The proposed policy favours one very specific group for no very obvious reason. For example, it’s perfectly possible to have two pensioners who live next door to each other with identical state pensions – one from the standard rate of the new state pension and one from the old basic pension plus Serps.
“As far as we can see, the first of these will be let off paying income tax but the second will not. In my view this is completely indefensible.”