Rachel Reeves urged to spare pensioners as fears grow millions more will face tax bomb .hh
It is thought that 10 million more pensioners could be impacted by 2032.
Rachel Reeves has been warned of the hardship already facing pensioners (Image: Getty Images)
Campaigners are pleading with Chancellor Rachel Reeves to axe a policy which will force millions more pensioners to pay income tax.
Ten million pensioners are expected to pay the tax by 2032 because the Treasury has refused to increase the tax-free threshold.
It is feared retirees who have no other income than the state pension will have to hand cash back to the Government if the personal allowance is not increased.
Alan Less of the National Association of Retired Police Officers warned that the cost of living crisis is not over and said the state pension should not be a “backdoor route into taxation for millions more older people”.
Mr Less – who is a spokesman for Later Life Ambitions, which gives a voice to 250,000 pensioners – said: “We urge the Government to reconsider the decision to freeze tax thresholds and to ensure that pensioners are not unfairly penalised for modest increases in their income.”
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The tax-free personal allowance is just £12,570 for 2024-25.
He warned that the scrapping of winter fuel payments for all but the poorest pensioners has “already left many older people struggling to afford heating and other essential costs”.
“The Government must take urgent action to support pensioners rather than adding to their financial burden,” he said.
Caroline Abrahams of Age UK also urged the Government not to tax the state pension, saying it would be “needlessly bureaucratic for the state to give these older people money with one hand, only to take it away with the other.”
She added: “Older people have raised concerns with us at Age UK about this looming problem and as a charity we have been calling for personal allowances to rise again.
“This would help older people in a few years time, and more immediately would provide some much-needed relief for those with modest private pensions who are paying income tax already, and who are finding life tough because of inflation.”
The calls come as the Bank of England warns that inflation is expected to rise to nearly 4%, pushed up by higher energy bills.
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Morgan Vine of Independent Age warned that many pensioners required to pay income tax “will still be living on a low income and experiencing financial hardship”.
He said: “For older people on a low income, any potential increase in taxation would be extremely concerning. Taxing the State Pension will instinctively strike many as counterproductive, and it may also be stressful for older people to suddenly have to start filling tax returns unexpectedly.”
A Treasury spokesman said: “The Government is having to take tough decisions now to fix the foundations of our economy and repair the £22billion black hole in the public finances that we inherited from the previous government.
“However, we are committed to protecting the triple lock of pensions, meaning the full new state pension will be worth around £1,700 more in 2029 and pensioners whose sole income is the new state pension and who have not deferred or receive protected payments do not pay any income tax.”
