Millions of state pensioners across Britain are facing what campaigners describe as a 'grossly unfair' financial squeeze as frozen tax thresholds drag them into the income tax net for the first time.
The Stealth Tax Crisis
Despite the much-heralded triple lock protection, analysis reveals that the combination of rising state pension payments and static personal allowance thresholds is creating a perfect storm for retirees. The personal allowance has been frozen at £12,570 since 2021 and will remain there until at least 2028, while the state pension continues its upward trajectory.
How the Numbers Stack Up
The full new state pension will reach £11,502 in April 2024, leaving pensioners with just £1,068 of their tax-free allowance remaining. This means anyone with additional income from workplace pensions, savings or part-time work exceeding this small buffer will immediately start paying income tax at 20%.
The Impact on Real Lives
Experts warn that this fiscal drag is particularly punishing for those who have modest additional income beyond their state pension. What many planned as a small financial cushion in retirement is now being eroded by unexpected tax bills.
Campaigners Cry Foul
Senior campaigners have slammed the situation as fundamentally unjust. Dennis Reed, director of Silver Voices, told Birmingham Live: 'The Government is giving with one hand through the triple lock but taking away with the other through the frozen tax threshold. This stealth tax is hitting those who can least afford it.'
A Growing Problem
The number of pensioners paying income tax has surged from 4.5 million in 2010 to nearly 8.5 million today. With thresholds remaining frozen until 2028, this number is projected to climb even higher, affecting the majority of state pension recipients.
The Political Fallout
This issue is creating significant political pressure, with calls for the next government to address what many are calling an intergenerational injustice. The frozen thresholds are disproportionately affecting those who rely on the state pension as their primary income source.
As the cost of living crisis continues to bite, this hidden tax burden is pushing many pensioners into financial difficulty, despite the government's promises of protection through the triple lock mechanism.
