More than two million recipients of the state pension are poised to receive what has been described as an 'unwelcome' tax demand from HM Revenue and Customs (HMRC) through the post.
Surge in Simple Assessment Tax Demands
Data obtained via a Freedom of Information (FOI) request by former Pensions Minister Steve Webb, now a partner at consultancy Lane Clark & Peacock (LCP), reveals a sharp increase in the number of people being hit with end-of-year tax bills. The figures show that in the 2023/24 tax year, over 1.3 million individuals received these demands.
This number has nearly doubled in just two years, rising dramatically from 758,000 in the 2022/23 period. The so-called 'simple assessment' notices are sent to people with straightforward tax affairs who do not submit a self-assessment return but have tax due that cannot be collected via their PAYE code.
Pensioners Bear the Brunt
A typical example is a state pensioner whose income exceeds the personal tax allowance but who has no other source of income, such as a private pension, from which tax can be deducted at source. Consequently, they receive an annual bill directly from HMRC.
The amounts demanded vary significantly. While nearly a quarter of the bills are for sums under £100, a similar proportion are for over £1,000.
Frozen Allowance Drives Numbers Up
The primary driver behind this surge is the ongoing freeze of the personal income tax allowance, which has remained static since 2021. As the state pension increases—it rose by 13% between April 2023 and April 2025—more pensioners find their income creeping over the tax threshold.
With the allowance freeze set to continue until 2028, and the state pension rising via the triple lock, the number of people receiving these demands is projected to surpass two million. Final figures for the 2024/25 tax year are not yet available, as demands for that period are issued during 2025/26.
Calls for a Wider Solution
Steve Webb commented on the findings, stating: “For many people, having to deal with the tax office is a hassle they can do without. But the continued freezing of the income tax personal allowance means that the numbers getting unwelcome end-of-year tax demands have soared.”
He added: “Many of these people will be pensioners whose only income is the state pension, and they now get an annual tax demand, with the amounts growing each year. Although the Government has indicated it may address this issue for a subset of pensioners from 2027, a much wider-ranging solution is needed.”
The situation highlights a growing administrative and financial burden on retirees, prompting calls for a systemic review of how tax is collected from those whose sole income is the state pension.
