{"id":277304,"date":"2025-11-22T13:42:17","date_gmt":"2025-11-22T13:42:17","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/277304\/"},"modified":"2025-11-22T13:42:17","modified_gmt":"2025-11-22T13:42:17","slug":"hmrc-set-to-punish-state-pensioners-with-60-tax-bill-thanks-to-rule-quirk","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/277304\/","title":{"rendered":"HMRC set to punish state pensioners with 60% tax bill thanks to rule ‘quirk’"},"content":{"rendered":"

Nearly 80,000 pensioners were caught in a quirk of the earnings system and hit with an effective tax rate of 60% last year, according to new data.\"HMRCHMRC set to punish state pensioners with 60% tax bill thanks to rule ‘quirk’<\/p>\n

State pensioners are being slapped by a “punishing” 60 per cent tax sting. Nearly 80,000 pensioners were caught in a quirk of the earnings system and hit with an effective tax rate of 60% last year, according to new data.<\/p>\n

A total of 77,000 Brits at state pension age \u2013 currently 66 years \u2013<\/a> and above were dragged into what is known as the 60% tax trap in 2024\/25, affecting those with incomes of between \u00a3100,000 and \u00a3125,140.<\/p>\n

Craig Rickman, pensions expert at Interactive Investor, said:<\/a> \u201cMore people now work well into their late 60s, including high earners at the peak of their careers. They often enjoy their work, and the continued sense of purpose, so want to carry on consulting or running a business until well into their golden years.<\/p>\n

READ MORE SUV drivers face new ‘premium’ to park their cars in part of UK<\/a><\/p>\n

\u201cHowever, there\u2019s a risk that ultra-high tax rates could mean losing older talent. As taxes take an even bigger bite from the cherry, many older high earners will weigh up whether they\u2019re better off stepping back and earning less, rather than risk facing such a heavy tax burden.\u201d<\/p>\n

Rickman said: \u201cThis data reveals the punishing impact of the 60% tax trap on older workers, as frozen tax thresholds pull more pensioners\u2019 incomes into six-figure territory.<\/p>\n

\u201cIf the tax-trap threshold had kept pace with inflation, workers would now be able to earn \u00a3155,000 before being hit with 60% income tax.<\/p>\n

“With the deep freeze on income tax bands set to endure until 2028\/29, and fears the government could extend it even further, thousands more people above state pension age will be hit with punitive rates of tax on some of their income.\u201d<\/p>\n

Rickman said: \u201cPaying into a pension to bring your income below \u00a3100,000 can attract 40% income tax relief and enable you to keep your personal tax-free allowance.<\/p>\n

\u201cJust don\u2019t forget to include the pension contribution on your tax return if it goes into a private pension, like a self-invested personal pension (Sipp) \u2013 also known as a pension pot for life \u2013 as you only receive the 20% basic-rate relief upfront.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Nearly 80,000 pensioners were caught in a quirk of the earnings system and hit with an effective tax…\n","protected":false},"author":2,"featured_media":277305,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[84,4176,2218,4174,4175,56,54,55],"class_list":{"0":"post-277304","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-finance","10":"tag-hmrc","11":"tag-personal-finance","12":"tag-personalfinance","13":"tag-uk","14":"tag-united-kingdom","15":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/277304","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=277304"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/277304\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/277305"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=277304"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=277304"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=277304"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}