Some 8.1 million people currently pay tax in retirement due to additional income on top of their State Pension.
Retirement expert Adam Pope from Spencer Churchill Claims Advice has warned that nearly two million people over State Pension age will feel the financial impact of the freeze on the Personal Allowance within the next four years. The latest figures from the Department for Work and Pensions show there are nearly 12.7 million people over State Pension age across Great Britain, including more than 1.1m living in Scotland.
The full New State Pension is worth £221.20 each week and as payments are typically made every four weeks, this amounts to £884.80 each pay period. Over the 2024/25 financial year, this is an increase of £902, taking the annual income from State Pension alone from £10,600 to £11,502. This leaves just £3,756 before the personal tax threshold is exceeded, equivalent to additional income totalling £313 per month.
The pensions expert continued: “As the State Pension amount goes up, more pensioners could have to pay more tax, making life harder for those already struggling. Over 60 per cent of pensioners are paying income tax, up from about 50 per cent in 2010. He said: “It’s important for those making policies to think about the needs of pensioners too, especially those who can’t earn more money.
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