Fears as 4million to pay tax on their state pension in two years

MORE than four million people are set to pay tax on their state pension for the first time in 2027, according to experts, as OAPs will be hit by Rachel Reeves’ freeze on how much income can be free of tax.

- By Steph Spyro Deputy Political Editor

Ex-pensions ministers warned of 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 income tax threshold of £12,570.

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, a partner at consultants Lane Clark & Peacock, said: “The standard rate of the new state pension is creeping ever closer to the frozen personal tax allowance.

“It is already the case that nearly three quarters 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.” People on the new full state pension are set for a rise of over £500 a year from next April following the latest official earnings data.