Pensioner Tax Trap

Every pensioner receiving just the state pension is being pushed into a tax trap that our beloved government doesn’t seem to have mentioned yet.

State pension payments are likely to increase to £12,631 in April 2026, which is more than the £12,570 tax-free personal allowance we are all given each year. The government have chosen to freeze the tax free amount until 2028/29 at least.

This means that every pensioner will fall into having to pay tax in just a year’s time. Tax on money given by the government after a lifetime of paying NI contributions, but which they are now saying you have to give them some of your hard earned pension back. If you have any savings in NS&I for example, which are not taxed at source, you could already be in the position of needing to pay tax now.

It isn’t clear yet how the government are planning to tax the pensions and savings but it seems likely that most pensioners will sleepwalk into the Self-Assessment system to calculate their tax liability each year. This may also mean £100 penalty if you didn’t know you had to do this and don’t file the form before the deadline of 31st January the following year.

This will hopefully become clearer over the next few months but if you are worried today and want to stay ahead of HMRC tax demands, please feel free to contact Ray Stewart on 01530 223373 of email ray@cbserves.biz and I can talk you through your own position and you can decide if you need help dealing with the new punishment us pensioners are being hit with.