HMRC warning to state pensioners who have £12,000 to their name

HMRC warning to state pensioners who have £12,000 to their name
-Credit: (Image: Reach Publishing Services Limited)


HMRC has issued a tax rise warning to state pensioners amid hopes the Triple Lock could be hiked by £460 next year. HMRC has warned pensioners they could be dragged into a new band, and have to start paying income tax.

The increase for those on the higher level means they will be receiving £12,003.68 a year. The current personal tax-free allowance is £12,570. This means any income up to that point is tax free - so £567 earnings could see you penalised.

Sir Steve Webb, the former Liberal Democrats pensions minister said: "From next year, roughly three in four UK pensioners will have to pay income tax, and just over a third of a million will be dragged into the tax net for the first time since they retired."

READ MORE Strictly Spoiler leaks and leaves viewers 'kinda shocked' after upsetting exit

If you go over that amount you will pay 20% of any additional income in income tax - up to earnings of £50,270 when this would jump to 40%. This would increase again to 45% for those earning more than £125,140.

Webb, who is a former Liberal Democrat pensions minister, said: "The reality is that the amounts which pensioners receive vary hugely, from a few pounds a week to hundreds of pounds a week. We estimate that around 2.5 million pensioners, or more than one in five of all pensioners, have state pensions in excess of the income tax threshold.

"These pensioners would overwhelmingly continue to be taxpayers even if future policy linked the income tax allowance to increases in the headline rate of state pension." 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.”