1.6million more pensioners will be forced to pay income tax because of sneaky change

03 April 2024 , 19:09

598     0

1.6million more pensioners will be forced to pay income tax because of sneaky change

Tory Chancellor Jeremy Hunt has refused to increase the threshold when people start paying income tax so record numbers of pensioners are being landed with tax bills

Up to 1.6million more pensioners will be paying income tax within the next four years because of a Tory stealth raid, it has been warned.

The Government has refused to increase the threshold when people start paying the levy so record numbers are being landed with tax bills. Rishi Sunak froze the amount people can earn before they pay income tax at £12,570 in 2021 and this was extended to 2028 by Chancellor Jeremy Hunt. 

Currently, 8.5million pensioners pay income tax – but analysis by the House of Commons Library has found an extra 1.6million will be paying it within the next four years compared to if the threshold had risen with prices. Without the tax freeze, the allowance would have risen to £15,220 this year and up to £15,990 in 2027/28.

It comes as pensioners were hit in the pocket as they did not benefit from National Insurance cuts in the last two Budgets. 

Liberal Democrat Treasury spokeswoman Sarah Olney, who commissioned the research, said: “These stark figures reveal the stealth tax bombshell facing pensioners under this Conservative government. Older people who have worked hard and contributed all their lives are now being clobbered with years of unfair tax hikes. Jeremy Hunt’s pensioner-punishing Budget will not be forgotten come the next election. The Conservative Party faces a reckoning at the ballot from older voters sick of being taken for granted.” 

According to the Institute for Fiscal Studies, more than 60% of over-65s now pay income tax, up from around 50% in 2010. Separate analysis from the Resolution Foundation found that the freezing of income tax thresholds will leave the average taxpaying pensioner £1,000 worse off by 2027-28.

However, both the Conservatives and Labour have committed to keeping the state pension triple lock. Axing the triple lock could have snatched hundreds of pounds from the pockets of the retired.

Under the promise, the state pension rises each year in line with the highest out of 2.5 per cent, wage rises or inflation. The state pension is going up by 8.5% this month (APR). This means the full basic state pension for men born after April 1951 and women born after April 1953 is rising from £203.85 per week to £221.17.

Elizabeth Baker