Warning as DWP £902 boost could have unintended consequences for nearly a million people

More than 900,000 pensioners could be forced to pay income tax following the 8.5 per cent increase in the State Pension announced in the Spring Budget, according to research conducted by financial experts Spencer Churchill.

More people than ever are paying income tax because the thresholds at which people pay tax have been frozen since 2021, while wages and benefits have widely been raised to try and match the high cost of living. This has the unintended consequence of making some pensioners who receive the pension and other allowcances into income tax payers.

From April 8, the full New State Pension will go up to £221.20 per week, which works out as an extra £902 per year and puts many elderly people just £1,068 below the income tax threshold. This equates to getting as little as £89 per month on top of your regular pension income, reports the Daily Record.

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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 paying taxes on their State Pensions for the first time. This is a direct consequence of the substantial