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Nine million pensioners to receive HMRC tax letters as pension growth outstrips frozen allowance

Triple lock uprates have pushed the full state pension past the frozen £12,570 threshold, triggering minimal tax demands from HMRC.

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Overview

  • DWP data shows 8.51 million pensioners paid income tax in 2024/25, and projections indicate nine million will do so in 2025/26.
  • The full new state pension rose by 4.1% in April to £230.25 per week (£11,973 per year), and is forecast to reach £241.90 per week (£12,578 per year) by April 2027.
  • The Income Tax Personal Allowance is frozen at £12,570 until 2027/28, creating fiscal drag that will tax retirees on minimal pension gains.
  • Steve Webb of pensions firm LCP warns that retirees solely reliant on the state pension could face tax bills of as little as £1.60 on £8 of extra income when thresholds are breached.
  • Work and Pensions Secretary Liz Kendall said the triple lock provides certainty for retirees and secured £7.84 billion in additional state pension funding this year.