It comes as state pension is forecast to rise by 3.9% under the triple lock.
Pensioners could face paying income tax (Image: Getty)
Millions of pensioners could be hit with tax bills for the first time. It comes as the state pension is forecasted to rise by 3.9% under the triple lock, resulting in a £489 increase to £13,036 a year from April 2027.
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This change means that the state pension will go above the £12,570 threshold that requires you to start paying income tax for the first time, and therefore, millions of older Brits will be hit with the inconvenient bill.
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The pensioners most likely to face a tax bill are those who get the State Pension plus extra income, such as a private pension or part-time work. This means some who have never paid tax before could find themselves owing money once the state pension rises above the £12,570 tax-free allowance.
The government has, however, said that no one whose sole income is from the full state pension will be taxed. Although it is unclear how that will be prevented.
The triple lock confirms whether the state pension will increase yearly by September’s inflation figure, average earnings growth between May and July or 2.5%. It uses whichever figure is highest.
It is likely that average earnings growth will be used to calculate the increase as inflation is currently at 3.1%.
Income tax thresholds are frozen until April 2028, which means that more people could find themselves in the higher tax bands through a concept called fiscal drag.
The higher rate tax band is frozen at £50,270, which means any earnings over this amount are taxed at 40%.
Meanwhile, the additional rate tax band is fixed at £125,140, beyond which any earnings are taxed at 45%.
Chancellor John Healey will confirm the annual uprating of the state pension at the Autumn Budget next month.
A 3.9% uprating would result in the following increases:
- Weekly: £250.70 (from £241.30)
- Four-weekly pay period: £1,002.80 (from £965.20)
- Annual amount: £13,036 (from £12,547)