Nearly two million pensioners will be forced to pay income tax over the next four years due to the government's freeze on the personal allowance, new research reveals. The threshold has been held at £12,570 until 2028, dragging more pensioners into the tax net.
Currently, 8.5 million pensioners pay income tax, up from 4.9 million in 2010. Analysis by the House of Commons for the Liberal Democrats shows an extra 1.6 million will start paying tax by 2027-28 compared to if the threshold had risen with inflation. Without the freeze, the allowance would be £15,220 now and £15,990 in 2027-28.
Liberal Democrat Treasury spokesperson Sarah Olney MP said: 'These stark figures reveal the stealth tax bombshell facing pensioners under this Conservative government. Jeremy Hunt’s pensioner-punishing Budget will not be forgotten come the next election.'
The Resolution Foundation estimates the average taxpaying pensioner will be £1,000 worse off by 2027-28. Former Tory pensions minister Baroness Altmann warned that poorer pensioners with only the state pension are at risk of fines for not paying tax they were unaware of.
A Treasury spokesperson defended the freeze as a 'difficult decision' to help pay back pandemic and energy crisis support, noting that National Insurance cuts have saved the average earner over £1,500.
