Campaigners are calling on the Government make changes to protect pensioners
Millions more pensioners are at risk of being forced to pay income tax over the next couple of years, campaigners have warned.
The continued freeze of the personal allowance – the amount someone can earn before they start paying income tax – means pensioner earnings are set to climb to the rate where they start being taxed.
As the state pension rate increases over the next couple of years, it will overtake the personal allowance threshold without changes from the Government.
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Experts sat around 12 million pensioners could face having to pay income tax on their state pension from 2027.
The freeze is known as a stealth tax because more people get dragged into paying into the system without the Government having to make any formal announcements about increasing taxes.
Some pensioners have already been dragged into paying tax because of the frozen thresholds.
Campaigners say it would be unfair for more older people to be taxed, given they have paid taxes during their working lives.
The Government is being urged to raise the personal allowance or make an exception for state pension payments.
Dennis Reed, who submitted a petition signed by over 117,000 people to Downing Street last month, said: “660,000 older people were brought into the tax system last year because the tax thresholds are frozen, and as long as they are frozen, more pensioners will be brought into the system.
“It’s just outrageous, you contribute tax and national insurance throughout your working life; to then have it taxed again is a double whammy.”
Money experts say the state pension is now “perilously close” to exceeding the personal allowance.
Based on current estimates, it could overtake it in 2027/28.
The personal allowance threshold is currently frozen until 2028, but there have been suggestions Chancellor Rachel Reeves could extend this to 2030.
