Sir Steve Webb says frozen income tax thresholds, combined with pension increases next year, may pull huge numbers into the income tax net
Money & Business ReporterMore than 500,000 pensioners may find themselves paying tax on their income from next year, a former pensions minister has warned.
Based on LCP’s calculations, some 390,000 more over-65s started paying income tax between the financial years 2021/22 and 2022/23. With a much larger pension increase expected in April 2023, a bigger jump in the number of over-65s paying tax is expected., by which the state pension is increased annually in line with inflation, average earnings or a flat rate of 2.5 per cent, whichever is highest. inflation in the year to September 2023. The August inflation figure was 9.9 per cent.
Sir Steve added that many occupational pensions will be increased because of inflation, although the exact rules may vary.