Frozen income tax thresholds, alongside bumper state pension rises, may push more pensioners into paying tax.
Some pensioners could have to start setting money aside for out-of-the-blue tax bills, a consultancy firm is warning.
For pensioners who have a state pension and a private pension, the state will collect any tax due through the code applied to the private pension.This could mean pensioners receiving over £242 per week would owe some income tax. LCP estimates that around one in five of these pensioners, or more than 400,000 may have no other source of income from which HMRC can collect the tax owed.
“Many are now at risk of an unexpected letter from HMRC asking for tax they may not have realised was due. Any pensioner with a pension next year over £242 per week will have tax to pay, and if they do not have a private pension through which the tax can be collected, they may need to set some money aside for an unwelcome tax demand.”
Earlier this week, Downing Street refused to guarantee that benefits would rise in line with inflation or that the triple lock for pensions would be based on earnings including bonuses.
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