A prominent pensioner advocacy group is calling on the government to increase the personal tax allowance by £1,000 for state pensioners, warning that without action, retirees could soon face unexpected tax burdens.
The demand comes ahead of the spring statement, with campaigners arguing that freezing tax thresholds will erode the value of pensions and undermine financial security for older people.
The call for reform is being led by Silver Voices, which warns that the current tax framework risks penalising pensioners who have already contributed through national insurance and taxes.
Other organisations, including Age UK and Independent Age, have echoed these concerns, urging the government to ensure pensioners retain the full benefit of their state pension without additional tax deductions.
State Pensioners at Risk of Falling Into Taxation
Campaigners argue that the government’s freeze on income tax thresholds will gradually push more pensioners into taxation, despite their limited incomes. According to Dennis Reed, director of Silver Voices, the state pension is intended as a safety net, but under current policies, many recipients may soon find themselves paying income tax on their pension.
Reed has urged Chancellor Jeremy Hunt to act before April 2026, when the frozen threshold will have remained unchanged for six years. “This would then present the ludicrous situation of the state pension safety net, which has already been paid for through national insurance contributions and taxes, being itself subject to tax,” he stated.
According to Independent Age, the current tax-free personal allowance stands at £12,570, while someone on the full new state pension will receive approximately £11,973 from April. This means that even a modest private pension could push pensioners above the tax threshold, creating an additional financial burden.
Joanna Elson, chief executive of Independent Age, noted that the freeze disproportionately affects those on low or moderate incomes, stating that “plans must be put into place so that every older person is able to receive this amount tax-free.”
Calls for Reform to Protect Pensioners’ Financial Security
Pensioner advocacy groups stress that a rise in the personal allowance for pensioners is necessary to counteract fiscal drag, where rising incomes are taxed more due to unchanged tax brackets.
Jan Shortt, general secretary of the National Pensioners Convention, warned that by 2028, nearly all pensioners except those on the lowest incomes would be subject to taxation. “Taxing state pensions is a demonstration of the disrespect towards an older generation who deserve financial security in their later years,” she added.
Age UK has also weighed in, arguing that the freeze effectively reduces the real value of pensions. Caroline Abrahams, director of Age UK, said, “We agree that it makes no sense for the government to give with one hand and take away with the other.”
With the spring statement approaching, pensioner groups are urging Rachel Reeves, the Shadow Chancellor, and the government to act swiftly to prevent state pensions from being increasingly taxed.
