Millions of State Pension claimants will pay income tax despite triple lock pledge

The number of pensioners paying income tax has increased by a huge two thirds since 2010. A total of 8 million of the UK's 12 million pensioners now pay income tax.

Another 650,000 will start paying income tax this year. About 1.6 million will be paying income tax by the time the tax threshold freeze - which started six years ago - ends in the 2028/29 tax year.

They will also pay an extra £1,000 a year on average in income tax. The national insurance threshold has also been frozen - but this is less of an issue because pensioners do not pay it.

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Chancellor Jeremy Hunt’s double national insurance cut has been designed to offset some of the damage. This will save more than 27 million workers £900 a year on average, Express reports.

Both the Conservatives and Labour have pledged to support the state pension triple lock. Prime Minister Rishi Sunak has gone a step further with his triple-lock-plus policy.

This pledges to increase the £12,570 personal allowance in line with inflation, earnings or 2.5 percent, whichever is highest. If rolled out, this should save pensioners an estimated £100 next year, rising to £275 by 2030.

The new state pension currently pays up to £11,502 a year. if it rises by five percent over the next two years, it will breach the personal allowance, forcing millions to pay income tax on their state pension.

New research from consultancy LCP suggests 2.5million already pay income tax on their state pensions. Typically, these are older pensioners who retired before April 6, 2016, on the old basic state pension.

This pays a much lower headline income of £8,814 a year for those who get the full rate. That is £2,688 below the maximum new state pension sum of £11,502.

Many on the basic state pension actually get more as it is topped up by additional state pension, such as the state-earnings related pension scheme (Serps) and state second pension (S2P). Former Pensions Minister Steve Webb, now working as a partner at consultancy LCP, said there is huge diversity in the type and size of state pension people receive.

While 3.2 million get the new state pension, which is simpler, 8.4 million older pensioners get the basic state pension, which is more complex. Additional state pension can increase its value by up to £200 a week.

Mr Webb said. "Some of the largest state pensions are paid to those who come under the old system and have large Serps entitlement." About 2.1 million on the basic pension pay income tax on it as a result.

Some on the new state pension also get more because they built up transitional protection of accrued rights prior to 2016. About 350,000 are paying income tax on their state pension, too.

Mr Webb said the Prime Minister's triple-lock-plus pledge will reduce their income tax bills but more than one in five will pay anyway. But they will pay a lot more income tax if Labour wins.