The Chancellor has confirmed controversial tax rules
Rachel Reeves has come under fire over tax rules.
Older people with only small private pensions are being warned about new tax rules.
These pensioners face being hit by taxes because of frozen tax bands.
The increasing state pension means those with only tiny private pensions are being pushed towards paying tax.
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The personal allowance – the point at which someone starts paying tax, and set at £12,570 – is on course to pass the state pension next year.
Chancellor Rachel Reeves has been forced to confirm people whose sole income is the state pension will not be taxed.
But that’s not the case for others with private pensions, no matter how small.
This will see incomes climb above the personal allowance limit.
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The Chancellor’s decision to keep tax bands frozen has proved controversial.
This is known as fiscal drag, and often dubbed a ‘stealth tax’, as Government claw more money in as people’s wages increase.
Households find themselves paying more in tax despite no formal announcements about rises.
It’s something to for older people to bear in mind in relation to their private pensions.
The lowest income pensioners, who don’t have private pensions and rely only on state payments, will not have to pay tax “during this Parliament”, Ms Reeves has confirmed.
She had been coming under increasing pressure over the issue before making the clarification.
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