State Pension is to increase by £470 a year to £11,973 next month: The full UK State Pension is set to increase by £470 per year from April, bringing the annual total to £11,973. This amount is now just below the personal tax allowance of £12,570, meaning pensioners who receive private pensions or savings interest may be pushed into the tax bracket.
A petition calling for State Pensions to remain tax-free has gained over 79,000 signatures and is pushing for a Parliamentary debate.
Why Are Pensioners Concerned About Taxation?
- The personal tax allowance has been frozen at £12,570 since 2021.
- By 2026, the State Pension alone could exceed this threshold, meaning pensioners may pay tax on their primary source of income.
- Many retirees already pay tax on small private pensions, creating a financial strain.
Dennis Reed, of Silver Voices, the campaign group behind the petition, states:
“The State Pension has already been paid for through National Insurance and tax, yet it is now being taxed again.”
“Many pensioners will be forced into poverty due to political choices.”
A Widow’s Story: The Reality of Pension Taxation
The petition was inspired by Colette, a 75-year-old widow, who now pays tax on her late husband’s pension entitlements and her own State Pension.
- Her total pension income exceeds the tax threshold by £1,000, meaning she must now pay income tax.
- Her small NHS pension of £37 per month is also being taxed.
- She has also lost her Winter Fuel Payment, making the financial impact even worse.
Dennis Reed highlights that:
“This frozen tax threshold has pulled thousands of older people with small private pensions into the tax system for the first time.”
“If the State Pension is taxed, it undermines the very principle of a retirement safety net.”
What Happens If the Petition Reaches 100,000 Signatures?
- At 10,000 signatures, the UK government is required to respond.
- At 100,000 signatures, the issue could be debated in Parliament.
Those supporting the petition argue that:
- The State Pension should be tax-free, as pensioners have already contributed through National Insurance.
- Triple Lock increases could become meaningless if extra payments are lost to taxation.
- Many pensioners live on tight budgets, and additional taxation worsens financial hardship.
With rising pension payments pushing retirees into taxation, many argue that the State Pension should remain a tax-free benefit. The government’s response—and whether Parliament will debate the issue—remains to be seen as the petition approaches the 100,000 signature threshold.
FAQ’s
Why are pensioners concerned about taxation?
With the State Pension increasing to £11,973 in April, it is approaching the frozen tax threshold of £12,570. This means pensioners with private pensions or savings may be taxed on their income.
What is the petition about?
The petition, started by Silver Voices, calls for the State Pension to remain tax-free, arguing that pensioners have already paid into the system through National Insurance contributions.
How close is the State Pension to being taxed?
If the personal allowance remains frozen and the State Pension continues to rise, it could exceed £12,570 by 2026, making it taxable for many pensioners.
Who is Colette, and why is her case significant?
Colette, a 75-year-old widow, now pays tax on her late husband’s pension entitlements and her own. Her total pension income exceeds the tax threshold by £1,000, making her liable for tax despite having a modest income.
What happens if the petition reaches 100,000 signatures?
At 100,000 signatures, Parliament may consider a debate on the issue. The government must also respond once the petition reaches 10,000 signatures.
How can I check if I need to pay tax on my pension?
If your total income, including State Pension, private pensions, and savings interest, exceeds £12,570, you may need to pay tax. You can check with HMRC or use the UK government’s tax calculator.
Will the personal tax allowance increase in the future?
Currently, the UK government has frozen the personal tax allowance at £12,570, meaning more pensioners will become liable for tax as incomes rise.
Does the government tax other pensioner benefits?
Some pensioner benefits, such as the Winter Fuel Payment and Attendance Allowance, remain tax-free. However, taxable income includes State Pension, private pensions, and some savings.
How can pensioners reduce their tax burden?
Pensioners can explore tax-free savings options such as ISAs, ensure they claim all eligible benefits, and seek financial advice on managing their taxable income.
Where can I sign the petition?
The petition is available on the UK government petitions website. Supporters can add their name to push for a Parliamentary debate on the issue.
