New State Pension rates next month could see nearly one million older people paying tax in retirement
02.03.2024 - 07:57
/ dailyrecord.co.uk
Financial experts from Spencer Churchill are warning that up to 900,000 low-income retirees may face an unexpected tax bill at the end of the next financial year due to income from their State Pension. Pensioners may have to start setting money aside to pay income tax bills as the personal allowance will remain frozen at £12,570 during the 2024/25 financial year.
Due to the annual State Pension uprating of 8.5 per cent in April, more people in retirement are expected to have an income over the personal allowance. From April 8, someone on the full New State Pension will see their payments go up from £203.85 per week to £221.20 and as payments are typically made every four weeks, this amounts to £884.80 each pay period.
Over the 2024/25 financial year, this is an increase of £902, taking the annual income from State Pension alone from £10,600 to £11,502. This leaves just £1,068 before the personal tax threshold is exceeded, so anyone with additional income of £89 or more per month - on top of State Pension - may receive a tax bill the following year.
Someone on the full rate of the Old or Basic State Pension will see payments go up from £156.20 per week to £169.50 - this amounts to £678 each pay period. Over the 2024/25 financial year, this is an increase of £692, taking the annual income from £8,122 to £8,814.
This leaves just £3,756 before the personal tax threshold is exceeded, equivalent to additional income totalling £313 per month.
A spokesperson for Spencer Churchill breaks down the impact of the State Pension uprating coupled with the current personal tax allowance threshold.
The spokesperson said: “This year, up to 900,000 retirees, particularly those benefiting from the Marriage Allowance, might find themselves