The Office for Budget Responsibility (OBR) forecasts that up to 1m more pensioners will pay income tax due to frozen tax thresholds. By 2026/27, an additional 600,000 pensioners will be affected, rising to 1m by 2030/31. Chancellor Rachel Reeves has extended the freeze on the personal allowance until 2031 and analysis shows that the full state pension, currently £230.25 per week, will exceed the personal tax allowance of £12,570 for the first time in 2027/28. The OBR noted that "much of this population is projected to pay only very small additional amounts of tax due to the freezes." The Government has pledged to exempt those whose only income is the state pension from paying income tax on it. Hitting out at stealth taxes, Daisy Cooper, the Liberal Democrats' Treasury spokesperson, said: "For poorer pensioners, every penny counts, and these unfair tax hikes could be the final straw." Former Pensioners Minister Sir Steve Webb, a partner at LCP, has called for a review of the starting point of income tax, especially for pensioners.
