1.2m more pensioners to face taxation, party claims

MORE than one million pensioners are set to be dragged into paying income tax by 2027-28 due to the Government’s stealth tax freeze, the Liberal Democrats have claimed.

When the tax freeze expires in 2027-28 the tax threshold will have risen to £15,990, according to new research which was commissioned by the party.

The personal allowance threshold – the rate at which people start paying tax – has been frozen at £12,570 since April 2021.

According to analysis from the House of Commons Library an estimated 1.2 million pensioners will begin paying income tax in 2024-25 and by 2027-28 an additional 1.6 million more will be doing so than if the personal allowance had risen in line with inflation.

The latest Department for Work and Pensions figures show 12.7 million Britons are currently receiving a state pension.

According to think-tank the Institute for Fiscal Studies 8.5 million people over the age of 65 are now paying income tax, up from roughly 4.9 million in 2010.

Separate analysis from the Resolution Foundation think-tank has found that freezing income tax thresholds will leave the average taxpaying pensioner £1,000 worse off by 2027-28, amounting to a collective hit of £8 billion.

Liberal Democrat Treasury spokesperson Sarah Olney MP said: “These stark figures reveal the stealth tax bombshell facing pensioners under this Conservative government.

“Older people who have worked hard and contributed all their lives are now being clobbered with years of unfair tax hikes.

“Jeremy Hunt’s pensionerpunishing Budget will not be forgotten come the next election. The Conservative Party faces a reckoning at the ballot from older voters sick of being taken for granted.”

A Treasury spokesman defended the decision on the freezing of tax thresholds, telling The Daily Telegraph: “After providing hundreds of billions of pounds to protect lives and livelihoods throughout the pandemic and Putin’s energy shock, we had to take some difficult decisions to help pay it back.

“Now the economy is turning a corner we have cut National Insurance by a third meaning that, coupled with above-inflation increases to personal tax thresholds since 2010, we have saved the average earner over £1,500 compared to what they otherwise would have paid.”