Andy Burnham and new Chancellor John Healey have committed to making sure pensioners whose only income is the state pension will not pay income tax, The i Paper can reveal.
From next year the state pension will be dragged into taxation for the first time, Unless the freeze on the personal tax allowance is lifted. The state pension is currently £12,547.60 a year, just £22.40 below the personal tax allowance of £12,570 – the amount of income that can be gained before tax is paid.
Because of the state pension triple lock, which sees pensions rise by the higher of inflation, wage growth or 2.5 per cent, the state pension will exceed the personal allowance from April, making a small amount of tax due for those receiving the benefit alone.
Shorts
Tax thresholds have been frozen since 2021, meaning millions of people pay more tax as wages rise, a process known as ‘fiscal drag’.
