4M TO PAY TAX ON STATE PENSION IN 2 YEARS

Campaigners warn frozen threshold will cause pensioners to be hit by stealth raid

- By Steph Spyro Deputy Political Editor

MORE than four million people are set to pay tax on their state pension for the first time in 2027, experts have warned.

OAPS will be hit by Rachel Reeves' freeze on how much income can be free of tax. Two ex-pensions ministers fear a stealth raid by the Chancellor.

The new state pension is likely to rise by around 4.7% next April, taking it to £12,535 a year - less than £1 a week short of the £12,570 income level at which pensioners would start to pay tax.

With the triple lock formula guaranteeing an increase of at least 2.5% the following year, the headline rate of the new state pension is certain to exceed the current tax threshold by 2027.

Former pensions minister Sir Steve Webb said yesterday: “The standard rate of the new state pension is creeping ever closer to the frozen personal tax allowance.

“We know for certain that someone who has no other income aside from the new state pension will be a taxpayer come April 2027.”

Sir Steve, a partner at consultants Lane Clark & Peacock, added: “It is already the case that nearly threequarters of all pensioners pay income tax, and the ongoing freeze in tax thresholds coupled with steady rises in the pension will drag more and more into the tax net.”

‘Two-thirds, or 8.57 million, of the near13 million state pensioners get the pre-2016 state pension, while 4.38 million are new state pension claimants, according to figures for 2024-25.