HMRC, the tax arm of the Labour Party government, is set to issue a record number of shock bills this year.
HMRC, the tax arm of the Labour Party government, is set to issue a record number of shock bills this year.
HMRC is catching state pensioners off guard with a record number of tax bills. HMRC, the tax arm of the Labour Party government, is set to issue a record number of shock bills this year.
It comes amid fiscal drag, which has seen frozen tax thresholds from the government drag more and more older people into the net. The tax office said it will issue 1.4 million simple assessments for the 2024-25 tax year, a rise of 80,000 from 1.32 million the previous year.
Experts have warned that the tax demands “catch pensioners off guard” and that retirees have become a “casualty” of the threshold freeze.
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Jon Greer, of wealth management firm Quilter, said: “Simple assessment letters are a prime example of the consequence of stealth taxes in action.
“Much of this rise is down to how frozen tax thresholds and higher state pensions are creating more tax liabilities for older people. A lot of these people will not even be aware that they may owe some sort of tax on their income and can catch many off guard.”
Sir Steve Webb, a former pensions minister, now partner at pension consultants LCP, said: “These figures highlight another casualty of the long-term freeze of personal tax thresholds.
“With every passing year, more and more pensioners on modest incomes are being dragged into the income tax net. With thresholds being frozen for years to come, more retired people will have to deal with this process in future”.
A Treasury spokesman said: “We are committed to help our pensioners live their lives with dignity and respect, which is why in April the basic and new state pension increased by 4.1pc.
“Pensioners will receive a boost of up to £470 to their income in 2025-26. Our commitment to the triple lock means millions will see their pension rise by up to £1,900 this parliament.”
Anyone who believes an error has been made in the assessment should get in touch with HMRC within 60 days to query it. More information on how to contact HMRC is available on GOV.UK.