DWP and HMRC urged to 'write' to people ahead of issuing 'nasty' tax demand

The Department for Work and Pensions and HMRC have been told they "must" write to pensioners "and explain they may face nasty tax demand surprise". Kelly Sizer is Senior Manager at Low Incomes Tax Reform Group (LITRG).

Speaking to GB News, Kelly discussed the government's decision to freeze the income tax personal allowance at £12,570. "But freezing the threshold means we all quietly end up paying a bit more tax while for those on the lowest incomes, it could mean they pay income tax for the first time as their wages go up, but the tax threshold stays the same," she said.

"This is also a challenge for pensioners. They don’t pay National Insurance, but their incomes could also be impacted by the personal allowance freeze." She said: "Rather than seeing a small amount of tax shaved off their pension automatically each month, they are likely to face an end-of-year tax demand, which could come as a nasty surprise.

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"LITRG has already received queries from pensioners who are upset about what this will mean for them. This makes us think that HMRC and DWP have got a lot more to do to support those pensioners who are brought into the tax net.

"At the very least, they should be writing to pensioners to explain what is happening." Audrey Cook, who lives in Bromborough, lives off her state pension and knows that another increase next year could tip her over into the category of having to pay income tax.

“It feels like a double-tax,” the 90-year-old said to the BBC previously. “We paid tax when we worked, we didn’t get big salaries, and now we’re paying on our little bit of pension which is not a lot. And with the cost of living you can’t keep paying extra all the time.

"The tax threshold should increase.” Joanna Elson, chief executive of Independent Age, said: “For older people on a low income who are facing a daily struggle to make ends meet, any potential reduction in income is incredibly worrying.

“Many of the people calling are confused about what tax they will have to pay, and many who are already living on a low income are worried about being worse off because they now have to pay tax.”