Close to 900,000 pensioners will be subjected to income tax for the first time this year due to a freeze on the tax-free allowance at £12,570, a decision made by Rishi Sunak in 2021 and extended by Jeremy Hunt until 2027-28. Adam Pope, a retirement expert from Spencer Churchill Claims Advice, warns that “freezing income tax thresholds for pensioners is worrying and could really affect their financial situation.” With the state pension set to rise to around £12,000 in April, many pensioners will find themselves over the threshold, leading to increased tax liabilities. Currently, 64% of pensioners are already paying tax, and this figure is expected to rise significantly, potentially leaving the average tax-paying pensioner £1,000 worse off by 2027-28.
