They’re just giving with one hand and taking away with the other...

IN THE coming months many British pensioners will face a horribly unwelcome surprise when they pick up their post from the doormat. There could be a letter in one of those brown envelopes informing them they will have to fill in a tax self-assessment form – even worse, that they did not pay their tax and face a penalty.

Alas, the threat of the taxman making his presence felt among our elderly is very real. Estimates emerged yesterday that 1.6 million more pensioners could become liable for income tax in the next few years, courtesy of the Government’s decision to freeze the personal tax threshold rather than allowing it to rise with inflation.

For Britain’s pensioners this is an iron fist clad in a velvet glove. The trumpeted state pension rise – the so-called triple lock guaranteeing a reasonable increase – is welcome. But it has dragged many more unsuspecting pensioners into the tax net.

Indeed, it could mean more than 9 million having to pay tax – a doubling of the 4.5 million liable in 2010, when the coalition government came to power.

Don’t get me wrong – I’m delighted that after years of erosion, the triplelock has boosted state pensions. Under the system, the .5 per cent inflation increase this year has raised the state pension by £17.35 a week, to £221.20.

But this good news comes with a nasty sting in the tail, as the state pension now accounts for 90 per cent of the taxfree allowance before you have to start paying income tax. Even a bit of extra private income will take pensioners into tax liability, and the accompanying nightmare of paperwork.

Many pensioners, existing on modest sums, will never have had to pay tax on their pensions before nor, in their working lives, done a self-assessment.

Given there are no plans for any form of marketing or advertising campaign alerting them to this, many are going to find themselves subject to tax without realising it – thus incurring penalties for not doing something they didn’t know needed to be done in the first place.

Nor can they rely on HMRC for help, if its helpline becomes overwhelmed. Where are they expected to turn for help, particularly those who are not confident online?

At the very least, the Department forWork and Pensions must write to alert pensioners to check whether they may be liable for tax – and we should have better liaisons between DWP and HMRC, with a dedicated helpline for to pensioners who want to speak to someone.

Either way, this situation leaves me exasperated – a feeling with which as a longstanding pensions expert, I have become increasingly familiar.

WHETHER it be the constant moves to increase the pension age – to 6 by the mid 2030s, meaning much higher poverty rates for 65-67 year-olds – the failure to reform social care or cutbacks to pension credit, it’s hard not to feel that our elderly, particularly the poorer among them, are getting a rum deal.

Even the laudable rise in pension income is partly offset by the spiralling cost of living: analysis by the think tank Resolution Foundation found that the average recipient would be left only £190 a year better off in practice.

Factor in the Chancellor’s ongoing freeze on income tax thresholds, and that is likely to be wiped out altogether.

Pensioners with little more than just a state pension deserve better than a Government giving with one hand – and cynically taking with the other.