State Pension annual uprating next April could see more older people paying tax
dailyrecord.co.ukThousands of pensioners may have to start setting money aside to pay income tax bills if the Triple Lock uprates State Pensions by the wages growth measure next April.
This is because the bumper pay rise of either 8.5 per cent (with bonuses) or 7.8 per cent (without bonuses), coupled with a frozen personal tax allowance of £12,570, could push people with an income of more than £242 per week over the threshold.
Consultants LCP (Lane Clark & Peacock) warned that growing numbers of pensioners could be dragged into the tax net based purely on a State Pension, adding that there is no automatic way of collecting the tax that they owe, because State Pensions are paid in full, before the deduction of tax.
In such cases, HM Revenue and Customs (HMRC) could operate a system known as ‘simple assessment’. Under ‘simple assessment’, the Department for Work and Pensions (DWP) would notify HMRC at the end of a tax year how much State Pension people have received.
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