Nearly two million people 'facing new HMRC tax bill'

Adam Pope, a retirement expert from Spencer Churchill Claims Advice, has issued a warning that nearly two million individuals over the State Pension age will experience the financial effects of the Personal Allowance freeze within the next four years. The Department for Work and Pensions (DWP) latest statistics reveal that there are almost 12.7 million people over the State Pension age in Great Britain, including over 1.1 million residing in Scotland.

However, out of this total number, approximately 8.1 million (64%) currently pay tax in retirement, primarily due to additional income from workplace or private pensions on top of their State Pension. Spencer Churchill anticipates that nearly 900,000 more individuals will surpass the Personal Allowance threshold of £12,570 during the current financial year, with an additional 2 million expected before the freeze concludes in 2028.

It's crucial to note that older individuals whose only income this year is the State Pension will not be taxed, and anyone with extra income who does not directly pay HM Revenue and Customs (HMRC) through earnings, will not receive a tax bill until June or July 2025, which must be settled by the end of January 2026.

The full New State Pension is valued at £221.20 per week and since payments are typically made every four weeks, this equates to £884.80 each pay period. Over the 2024/25 financial year, this represents an increase of £902, raising the annual income from State Pension alone from £10,600 to £11,502.

In light of the personal tax threshold, pensioners could end up with unexpected tax bills if their income exceeds certain levels. With the full rate of Basic State Pension amounting to £169.50 weekly or £678 every four weeks, the annual