State pensioners with SERPS topping up their payments are being warned.
State pensioners aged over 80 sent ‘inevitable’ letter and ‘it’ll get worse'(Image: )
Hundreds of thousands of state pensioners over aged 80 are being hit with an “inevitable” letter from HMRC – and it will “only get worse”. Department for Work and Pensions (DWP) state pensioners with SERPS topping up their payments are being warned.
It comes after it emerged more than 300,000 pensioners are paying at least £1,000 in tax on their state pension. The number of pensioners hit with four-figure “retirement tax” bills rose by 71,000 in the last year, from 249,000 to 320,000.
3.2 million retirees – around one in four – currently have state pensions that exceed the personal allowance. And the Telegraph reports pensioners aged 80 and over were five times more likely than the under-80s to be hit with bills of at least £1,000.
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15,800 retirees paid at least £2,000 of tax on their state pension income alone in the last financial year, a rise of 48 per cent from 10,700 in 2024-25.
Tom Selby, of wealth manager AJ Bell, said: “Pensioners being taxed on at least a portion of their state pension income is an inevitable consequence of the freezing of tax thresholds and will only get worse in the coming years, particularly as the triple lock keeps ratcheting up the value of the state pension for millions of retirees.
“The only sensible route out of this mess is to unfreeze those thresholds, but that is unlikely to happen until the next decade at the earliest.”
Adam Cole, of wealth manager Quilter, said: “With the personal allowance stuck in place while the state pension continues to rise, more retirees are being pulled into tax without any meaningful improvement in their living standards.
“For many pensioners, there is a growing disconnect between policy intent and lived experience. Income is rising largely because of government uprating decisions, yet tax allowances have failed to keep pace with inflation.
“The result is that pensioners are increasingly taxed on income designed to provide security, not discretionary spending.”