HMRC warning issued to state pensioners who have £1,070 to their name

State pensioners with £1,050 to their name have been warned by HMRC. Pensioners who get the full state pension - worth £11,500 a year - have been warned if they have savings in fixed-rate savings accounts, they face having to pay a bill.

The amount of income tax you pay depends on your total annual income from all sources. For example earnings (including State Pension), profits from self-employment and rental income, according to HMRC guidance and huidelines.

Other pensions you’re getting, bank or building society interest and income from your investments are also impacted. You only pay Income Tax once your total annual income is above your Personal Allowance. The standard Personal Allowance for the tax year 2024/25 is £12,570.

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The state pension this year is £11,500 - while the Personal Allowance Threshold stands at £12,570 - meaning you only need £1,070 from other sources to become eligible to pay some tax on your earnings, personal finance experts are warning.

Money Helper warned: "If you’re employed or you have income from another pension as well as the State Pension, HMRC will ask your employer and/or pension provider to apply a suitable tax code. This is to compensate for the fact that tax hasn’t been deducted from your State Pension. The result will be that you have paid the correct tax overall.

"Your employer and/or pension provider will pay this to HMRC on your behalf." Money Helper said in its guide: "If you’re self-employed and getting your State Pension, or you have other income – such as income from renting a property – you’re likely to need to fill in a Self Assessment tax return at the end of the year."

Money Helper says it is vital to check each year that you’ve paid the right amount of tax on the income you get.