DWP data contradicts Sunak's ITV general election debate pension tax claims as 1.5m affected

Election debate Keir V Starmer
-Credit: (Image: ITV)

Prime Minister Rishi Sunak and Sir Keir Starmer clashed repeatedly during the first televised election debate of 2024, with the Conservative leader going on the attack, claiming that Labour would raise taxes by £2000 and even start taxing people claiming the State Pension. However, this was almost immediately refuted by pensions experts.

During the first debate of the general election, Prime Minister Rishi Sunak's assertion that Labour would impose taxes on pensioners was met with scepticism by a tax and pension specialist.

The Labour leader dismissed Sunak's repeated assertions that his party would "raid" pensions if they came to power, calling the PM's claim that he would increase taxes by £2000 "garbage". The beleaguered Prime Minister said that Labour's spending proposals would cause the State Pension to be taxed "for the first time," but this was quickly challenged by finance experts.

Paul Lewis, a personal finance and pensions expert known for his work on Radio 4's Money Box, revealed that more than a million pensioners are already being made to pay tax on their State Pension. According to Department for Work and Pensions (DWP) figures revealed by Mr Lewis, an astonishing 1.5 million pensioners are already receiving tax notices, reports the Mirror.

READ MORE: Who won the ITV election debate? Poll shows who came out on top after Starmer and Sunak clash

In response to a Freedom of Information (FOI) request from Mr Lewis, the DWP acknowledged that approximately one in ten pensioners are subject to taxation. During the debate, Paul Lewis tweeted: "Sunak: we will ensure the state pension is never subject to tax. Hmmm."

"DWP told me in an FOI that 1.5 million people already have a state pension which by itself is liable to tax."

Sir Keir Starmer
Sir Keir Starmer called the Prime Minister's claims of a tax raid 'garbage' -Credit:PA

The current minimum tax threshold, which has been frozen since the pandemic, is £12571, while the full State Pension pays out £11,502 per year. Meaning that any income over this bracket is taxed, so income from private pensions or other sources can easily push many into paying tax.

Many workers build up private pensions during their working life and can withdraw this money either as a lump sum payment, or as an annuity, when they reach the minimum age set by the scheme, or the State Pension age of 66. Though a certain amount of this money can be claimed tax-free, frequently this increased income can push older people into paying tax.

Also disagreeing with the Prime Minister's claim, HM Revenue and Customs' pension guide shows that frozen income tax thresholds are already making life harder for people later in life. HMRC explains: "Your pension provider will usually take off any tax you owe before they pay you. They’ll also take off any tax you owe on your State Pension.

"If you get payments from more than one provider (for example, from a workplace pension and a personal pension), HM Revenue and Customs (HMRC) will ask one of your providers to take the tax off your State Pension.

"At the end of the tax year you’ll get a P60 from your pension provider showing how much tax you’ve paid."

Money Saving Expert founder Martin Lewis was also quick to refute the Prime Minister's claims that Labour would tax pensioners, more than the Conservatives already were. Posting on X, he said: "Sunak "For the first time in UK history pensioners will pay tax". Is very inaccurate phrasing.

"Pensioners do pay tax just like everyone else. What he's talking about is paying tax if you get the full State Pension and have no other income."