HMRC warning to State Pensioners over '£130 deduction' - what older people need to know

The New and Basic State Pensions are set to increase by 4.1% from April next year, while additional elements will see a rise of 1.7%. This is in line with the Triple Lock system, which ensures that these pensions increase annually according to the highest figure between average annual earnings growth from May to July (4.1%), CPI in the year to September (1.7%), or 2.5%.

However, a recent social media video falsely claimed that HM Revenue and Customs (HMRC) has warned State Pensioners of a "£130 deduction to the monthly State Pension". The Labour Government has committed to maintaining the Triple Lock for the next five years, which may be causing some confusion.

Meanwhile, the Personal Allowance will stay frozen at £12,570 until the beginning of the 2028/29 financial year. The full New State Pension, currently valued at £11,502 for the 2024/25 tax year, will increase to £11,973 in 2025/26.

This leaves just £1,068 in the current year before the tax threshold is exceeded and £597 in 2025/26. It's crucial to remember that those on the full New State Pension won't pay income tax, but older individuals with additional income through employment, private or workplace pensions, might need to pay tax.

For most people, this would be automatically deducted through PAYE on employment and tax on private pensions. Those who don't pay tax automatically will receive a tax bill from HMRC the following summer, to be paid by January in the next year, reports the Daily Record.

There's been a lot of speculation about the number of pensioners who will pay tax. However, out of the 12.7 million State Pensioners in the UK, nearly 8 million (62%) already pay some tax in retirement.

This isn't a new phenomenon. With auto-enrolment in the workplace