The state pension has increased by a record 10.1 percent this financial year, with the money hitting pensioner bank accounts from April 10.
The hike is based on September’s consumer price inflation figure, after Prime Minister Rishi Sunak restored the triple lock mechanism.
Yet the double-digit state pension increase comes with a sting in the tail, as I reported last week.
It is pushing many pensions over the £12,570 personal allowance, at which point they start paying income tax.
Many pensioners who did not pay income tax before now find themselves facing a shock bill from HMRC.
That’s because Chancellor Jeremy Hunt has frozen income tax thresholds all the way through to 2028, dragging more into HMRC’s clutches as pension incomes rise.
The tax demands are already landing, with Express.co.uk reader Cornyboy38 confirming: “Yes, I got mine two weeks ago telling me I will now have to pay tax.”
Another reader, REVet, an army veteran, said: “I have already had my tax demand. It lowers the [state pension] rise down to 5.7 percent in real terms. Going to be a hard year.”
The new state pension is now £10,600.20 a year for a single person who gets the maximum amount.
They only need to earn £1,969.80 a year on top of that to breach the personal allowance and pay basic rate income tax.
Those with small company or personal pensions are being caught.
For all the latest Business News Click Here
For the latest news and updates, follow us on Google News.
