140,000 pensioners told to pay first tax since retiring – what you need to know
https://inews.co.uk/inews-lifestyle/money/140000-pensioners-told-to-pay-first-tax-since-retiring-what-you-need-to-know-3191067
Posted by theipaper
140,000 pensioners told to pay first tax since retiring – what you need to know
https://inews.co.uk/inews-lifestyle/money/140000-pensioners-told-to-pay-first-tax-since-retiring-what-you-need-to-know-3191067
Posted by theipaper
14 Comments
More than 100,000 pensioners will be hit by an demand to pay a tax bill in the next six weeks, it has been revealed.
The combination of freezing tax thresholds and a substantial increase to the state pension has led to many more pensioners being dragged into paying income tax for the first time.
And HMRC has now revealed that at least 140,000 pensioners will be hit with a tax demand because they are now above the frozen income tax threshold. It comes after former chancellor Jeremy Hunt extended the period of threshold freezes up until April 2028.
The full new state pension saw a 10 per cent increase in April 2023 to £10,636.60 annually, followed by another 8.5 per cent rise in April this year, taking it to £11,541.90 per year.
In contrast, the personal allowance – before tax is applied – stands at £12,570 annually, meaning thousands of individuals with a private pension, in addition to the state pension, are now liable to pay tax on their retirement funds for the first time.
HMRC confirmed this week that it is in the process of sending letters to approximately 560,000 people who have taxable income but are not registered through self-assessment or PAYE, including the aforementioned 140,000 pensioners.
The letter will include a detailed calculation of any tax due for income they received between April 2023 and April 2024. They’ll need to pay what they owe using something known as Simple Assessment.
Former pensions minister and now partner at LCP, Sir Steve Webb, warned that although the size of the bill will often be relatively small at first, it could grow year-on-year if the current policy of freezing tax thresholds continues.
He said: “It is rarely good news to receive a letter from HMRC and in this case 140,000 pensioners will be getting a tax demand in the next few weeks for the first time since they retired.”
“Oh no! My triple-locked pension has gone beyond the frozen tax threshold and I have to pay tax on my PRIVATE PENSION! What a horror!!”
**/S**
Cry me a river.
“The full new state pension saw a 10 per cent increase in April 2023 to £10,636.60 annually, followed by another 8.5 per cent rise in April this year, taking it to £11,541.90 per year.”
How many hard working productive employees saw a 10% raise in 2023, followed by an 8.5% raise in 2024 to put them in a higher income tax bracket?
And if they don’t have any other pension, they’re still not paying tax as they’re under the £12,570 taxable threshold with maximum state pension at £11,541.90.
A pension is simply deferring paying tax on a chunk of income until you draw it in retirement.
It’s still a very good deal for most people because of how large the UK personal allowance is.
Rather than paying say 42% tax on that chunk of income as salary when you were working age, you can instead put it in a savings account and only pay 20% on a small fraction of it later on.
You avoid paying the higher tax threshold and end up vastly better off as a result. It’s why GPs and anyone else approaching six figures so frequently stuffs their income into a pension pot to avoid the deadly 60% income tax trap.
Yeah alright, fine. If they’re over the threshold they’re over the threshold. Nothing special about being retired.
Stop, I’m gunna cum…
About time the geriatrics started paying their fair share
I’m a little disappointed at the number of my generation who can’t wait to impoverish their future selves. Pensions are generous for a reason. And we’ll need them even more now that gold plated final salary payouts are firmly a boomer relic. For that reason, even if it’s a drain on my taxes, I support good pensions for our elderly. Yes the current 60+ have been lucky in their lifetimes, but once they’re gone we’ll be back to the historical norm of poorer elderly folks – you and me.
This is ridiculous. Pay tax and NI all your life to then pay it again when you get it returned to you after you are no longer able to work.
Pensions should never, ever be taxable and this financial penalty is like a kick in the head from a Manchester police officer.
Yes because the amount they get has gone up so fucking much that they now have to pay taxes!
Well that generation fucked us all over with Brexit and we were gracious still to put our lives on hold for two years for them during covid. Now we are short on cash. The least they can do is receive a little tax increase.
When I got married, the first thing i did was set up a private pension. Now I’m retired when and if I take some out of my pension, I pay tax, which i will try and keep to the minimum. Me and my wife pays tax through what we spend money on. If the UK government didn’t waste money on shite or give it away to other countries that don’t need handouts. There would be more money in the UK economy. Any UK government, labour, or conservative don’t want to give you a pension, that’s why there raising the retirement age. Look what happened to women. They raised the retirement age quickly and never told them. I know it was going g to rise, but not as quick. How would you feel if they raised the retirement age to 70 next week.
[european pension](https://researchbriefings.files.parliament.uk/documents/SN00290/assets/36b50ed6-6577-46f6-a344-ca9bf0289521.png)
Not everyone is on the top pension. I’m on the old one as are around 8 million. It worked out at £8,933 last year. That’s three quarters of pensioners.