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Almost half of those affected will be over 60(Image: Getty Images\/iStockphoto)<\/p>\n‘Many older people will just receive a letter or notice a tax code change, with no idea why they\u2019re suddenly being taxed on their pension income’Almost half of those affected will be over 60(Image: Getty Images\/iStockphoto)<\/p>\n
People over 60 have been warned that they face a big tax bill on their pension and that ‘most won’t even see it coming’.<\/p>\n
Experts have warned that nearly half of new taxpayers by 2027 will be over the age of 60 due to a combination of frozen tax thresholds and rising pension payments.<\/p>\n
This mixture of circumstances is quietly pushing more retirees into the tax bracket, experts say, meaning nearly 18 million more people are expected to be paying income tax by 2027.<\/p>\n
The amount state pension increases by each year is determined by the ‘triple lock’, which guarantees payments will rise by whichever is highest out of the annual rate of inflation, average growth in earnings, or 2.5 per cent.<\/p>\n
In April this year, payments rose by 4.1 per cent, in line with wage growth, which saw the new state pension rise from \u00a3221.20 to \u00a3230.25 per week.<\/p>\n
Fiona Peake at Ocean Finance said many pensioners will be unaware that increasing payments may push them into paying income tax in the coming years.<\/p>\n
She warned: \u201cNearly 18 million more people are expected to be paying income tax by 2027, and almost half of them will be over 60.<\/p>\n
“With the State Pension rising each year but the personal allowance stuck at \u00a312,570, more older people are being dragged into the tax system.<\/p>\n
\u201cThe full new State Pension now pays \u00a3221.20 a week, or around \u00a311,500 a year, just a few hundred pounds shy of the personal allowance. Add even a modest private or workplace pension, and suddenly you\u2019ve got a tax bill.<\/p>\n
\u201cThe frustrating thing is, this is happening quietly. It\u2019s not a tax rise on paper, but it feels like one in practice. Many older people will just receive a letter or notice a tax code change, with no idea why they\u2019re suddenly being taxed on their pension income.<\/p>\n
“It\u2019s especially tough for those on a fixed income who are already watching every penny. And with inflation expected to rise again this year, it\u2019s yet another blow to pensioners\u2019 pockets.\u201d<\/p>\n