Millions of pensioners could have to file self-assessment tax returns online by 2027, when the state pension is expected to exceed the personal income allowance.

The new state pension will be worth £12,548 a year from April 2026, just shy of the £12,570 allowance (the amount of income you can earn before you have to start paying tax), which has been frozen until at least 2028.

The amount you get from a full state pension is expected to breach the allowance in April 2027 thanks to the triple lock, which pushes up payments in line with inflation, average wage growth, or 2.5 per cent — whichever is higher.

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And that could mean pensioners will need to fill out a self-assessment tax return, which will have to be done online as part of the Treasury’s Making Tax Digital initiative.

A new burden for pensioners

Dennis Reed from the over-60s’ charity Silver Voices said: “I’m concerned about the administrative burden that could be pushed on to vulnerable pensioners who will be left worrying about their tax liability and anxious about filling out online assessment forms if they’re not online themselves.

“Older people in particular do not like to be in debt, it’s not a way they’re used to living.”

More than 13 million get the state pension with 4.3 million getting the new state pension which goes to those who reached retirement age after 2016. Some 56 per cent get the full amount (£230.25 a week this year), according to the retirement specialist Just Group.

The previous Conservative government pledged to raise the personal allowance for pensioners by 2.5 per cent to avoid a “retirement tax” being imposed on those whose sole income is the state pension.

The chancellor, however, is said to be considering lowering income tax thresholds or extending the freeze on the existing thresholds until 2030 as a means of raking in more tax through fiscal drag, which is where taxpayers are pulled into higher tax brackets as their pay goes up.

This would mean millions more pensioners paying tax, according to analysis of HM Revenue & Customs data by the Low Incomes Tax Reform Group, a campaign group.

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At the moment the state pension is paid by the Department for Work and Pensions without any tax deducted first. Many pensioners will have other sources of income, such as a workplace pension, and if they have to pay income tax on that it is usually deducted by their pension firm at source.

Once the state pension exceeds the personal allowance even those without any other sources of income will have to pay tax if they are entitled to the full state pension.

HMRC has not said how it would collect the tax but experts have speculated that it is likely to ask pensioners who do not pay tax through a personal pension to complete a self-assessment tax return.

Alternatively, it could implement its own PAYE system for those who get the state pension, but this could cost more than £100 million, according to analysis from 2013 by the now disbanded Office for Tax Simplification, which was an independent office of the Treasury.

Another option would be for HMRC to send pensioners a bill outlining the tax that they owe for the year. This could lead to “unexpected tax demands that can cause cashflow problems for pensioners”, according to the Low Incomes Tax Reform Group.

Mike Ambery from the pension firm Standard Life said: “Without a policy shift — for example, a ‘triple lock plus’ that raises tax thresholds in line with state pension increases — many in retirement will face paying tax on the state pension alone.”

He said this would risk “disincentivising even modest private saving because small amounts of additional pension income would immediately become taxable”.

Ambery said: “HMRC would need to rely heavily on tax code adjustments and simple assessment — where HMRC calculates the tax owed and sends a bill after the tax year ends — to avoid millions of new self-assessment returns.”

HMRC said: “No one has to file a tax return because the amount they get in state pension takes them over the personal allowance. Existing self assessment customers pay any additional tax owed on the old state pension through self assessment. Those taxpayers who are employed, or get a private pension, usually have this tax collected via PAYE, while anyone else affected may be issued a simple assessment.”