More than one million pensioners across the UK are set to pay the higher rate of income tax this year as frozen tax thresholds push increasing numbers into the 40 per cent bracket.More than one million pensioners across the UK are set to pay the higher rate of income tax this year as frozen tax thresholds push increasing numbers into the 40 per cent bracket.More than one million pensioners across the UK are set to pay the higher rate of income tax this year as frozen tax thresholds push increasing numbers into the 40 per cent bracket.

Over one million state pensioners face a 40 per cent tax blow in a stealth tax raid this year. More than one million pensioners across the UK are set to pay the higher rate of income tax this year as frozen tax thresholds push increasing numbers into the 40 per cent bracket.

Latest Department for Work and Pensions ( DWP ) figures show 13 million people have reached State Pension age across Great Britain, with 8.51 million pensioners paying income tax in the last financial year.

Charlene Young, senior pensions and savings expert at AJ Bell, warned that “the nation has fallen victim to the effects of fiscal drag in recent years.”

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She explained that “frozen allowances and tax thresholds have pulled more people into the tax system for the first time and hiked the rates of tax people pay as their income rises and they breach a new tax band.”

The pensions expert highlighted that “pensioners are not shielded from it either – over one million people above state pension age will breach the higher rate 40 per cent threshold this tax year, more than double the number there were when the big freeze began.”

Ms Young noted that “the UK Government is in a straitjacket thanks to its own fiscal rules, and these figures will bolster the arguments of those calling for state pension reform.”

“The full ‘new’ state pension is close to breaching the tax-free Personal Allowance, and many pensioners already receive well above this thanks to the way benefits could be built up under the old system,” she added.

The pensions expert questioned whether the Government can “really continue to ignore calls for further reform”.

Each of us has a ‘personal allowance’. This is the amount we can earn without paying any income tax and is therefore tax-free.

If you earn more than your personal allowance, you pay tax at the applicable income tax rate on all earnings above the personal allowance, which is your taxable income, but the allowance itself remains untaxed.