'State pension tax trap': Around 820,000 pensioners set to pay income tax on pension alone within two years

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State pension tax trap': Around 820,000 pensioners set to pay income tax on pension alone within two years.

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Around 820,000 pensioners are expected to become liable for income tax on their state pension alone within the next two years, according to new analysis.The increase is being driven by rising state pension payments alongside frozen income tax thresholds, which have remained unchanged since the 2021/22 tax year.Britain's 12 million pensioners could be affected as the full new state pension moves closer to exceeding the personal allowance.The personal allowance, which is the level of income people can earn before paying income tax, has remained frozen at £12,570 for the past five years.

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TRENDING Stories Videos Your Say Meanwhile, the full new state pension has increased to £12,547.60 a year, leaving a difference of just £23 before pensioners become liable for income tax.Under the triple lock, the state pension rises each year by the highest of inflation, average earnings growth or 2.5 per cent.Even an increase of 2.5 per cent would push the full new state pension above the personal...

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