More pensioners set to be dragged into paying income tax over the coming years
More pensioners will find themselves paying tax (stock image).
A state pensioner was left fuming after learning he would have to start paying income tax because of an “unfair” rule.
This is set to happen to thousands more older people over the next couple of years as increases to the state pension push them over the threshold to start paying income tax.
Frozen tax thresholds mean more pensioners face paying tax as their income climbs each year.
READ MORE: The PIP claimants who will fail to qualify for benefit under tough new rules
Get our best money saving tips and hacks by signing up to our newsletter
The state pension is on course to keep rising every year, but the personal allowance rate – the amount when someone starts paying income tax – is currently frozen until 2028, meaning more are set to be dragged into paying tax at a rate of 20%.
Critics have called for the personal allowance to be raised or a special case to be made for pensioners.
Those who also have private pensions or other sources of income alongside their state pension may be already over the £12,570 threshold.
One pensioner this has already happened to is Tom McDougall, 69.
He claims he has been hit by a double tax, having paid into the system during his working life.
The pensioner was left stunned when he learned he was judged to have too much income and so needed to pay tax.
Mr McDougall told BirminghamLive: “I retired at 60 in 2016 on grounds of health, I received my small company pension.
“When I was 66 I claimed my state pension.
“Imagine my utter shock that my income personal income tax allowance was reduced by the same amount as my state pension.
“I had already paid my income tax and National Insurance on my gross PAYE salary.
“So HMRC is already double taxing the state pension.”
He added: “I don’t think that many people understand that their state pension, when they receive it, is classified by HMRC as income.”
Campaigners have launched a petition calling on the Government to raise the personal allowance limit to £20,000.
It has attracted over 200,000 signatures and is due to be debated in Parliament next month.