Rachel Reeves is facing pressure to raise the Personal Tax Allowance for pensioners to avoid hundreds of thousands having to start paying income tax.
Campaigners warn that the is on course to rise above the threshold at which income tax must be paid unless the government introduces a special dispensation for OAPs.
A petition led by Silver Voices is calling on Chancellor Rachel Reeves to increase the allowance by at least £1,000 in the upcoming Spring Statement and to align future increases.
The campaign has gained traction among pensioners who feel penalised after decades of contributing to the system.
The Personal Tax Allowance has been set at £12,570 since 2021, while the has risen annually under the , which guarantees growth based on inflation, wage increases, or 2.5%, whichever is highest.
The Personal Tax Allowance has been set at £12,570 since 2021 (Image: Getty)
As things stand, the is expected to exceed this tax-free threshold by 2026, leading to taxation for pensioners who rely solely on their pension.
Dennis Reed, director of Silver Voices, warned that pensioners are being “dragged into taxation” because the government has failed to adjust tax thresholds in line with pension increases.
Writing on Change.org, he urged the government to act, stating: “Will you stand up to protect older people and call on the Chancellor to increase the tax threshold for state pensioners by at least £1,000?”
The issue has sparked frustration, with many pensioners arguing that taxation on pensions discourages savings and creates financial hardship. The government’s removal of universal Winter Fuel Payments for certain groups has only added to their grievances.
Public sentiment has been vocal, with pensioners questioning the government’s spending priorities. Some have criticised the allocation of funds to initiatives such as international aid and net zero policies while pensioner welfare and domestic support receive less attention.
One pensioner commented: “We pay huge amounts of tax during our working life while planning and saving for retirement, only to get taxed again on our savings and pension. It is time for this to stop and to at least reward those who save and plan with no tax on our pensions. If this does not happen, then why bother to save at all?”
Older people in the UK could be left with unwanted tax bills by 2026 (Image: Getty)
Another expressed frustration over financial struggles despite a lifetime of work and saving, saying: “Like most pensioners, I have worked for 40 years, took out a small private pension, never claimed benefits… now I am getting taxed and didn’t get any winter fuel allowance. We have been robbed. So angry with this government.”
Others have pointed to disparities in government support, highlighting the contrast between pensioner taxation and benefits provided elsewhere. One said: “You are told to save for old age, and when you do, the government punishes you.”
The mounting discontent presents a challenge for the Labour government, which has pledged to focus on cost-of-living issues but has yet to commit to changes in pensioner taxation. With an increasing number of retirees expected to fall into the tax-paying bracket in the coming years, the debate over the Personal Tax Allowance is likely to intensify.
As pensioners continue to make their voices heard, the question remains: will the government act to ease the tax burden on retirees, or will frozen thresholds erode pensioners’ financial security?