Chancellor Rachel Reeves has been warned she cannot 'act surprised' after data revealed that one million pensioners will face tax bills for the first time by 2030-31. The Labour Party Chancellor has pledged to simplify the tax system for pensioners whose only income comes from the state pension, but the decision to freeze income tax thresholds until 2031 is drawing sharp criticism.
Frozen Thresholds Bite Hard
The Office for Budget Responsibility (OBR) estimates that an additional 600,000 state pension recipients will become liable for income tax by 2026-27, with the figure rising to one million by 2030-31. This is a direct consequence of the threshold freeze, which Ms Reeves has chosen to extend.
Conservative MP Alison Griffiths stated: 'The Government regularly tells people they have not increased income tax rates. However, pensioners, who are a savvy bunch, can see exactly what is happening. They do not need a Treasury briefing to understand where more of their income is being taxed each year. Ministers cannot make that decision and then act surprised when pensioners ask questions about fairness.'
'A Political Choice'
Ms Griffiths emphasised: 'The Chancellor chose to extend the freeze in the personal allowance until 2031. That was a political choice. It means that more pensioners will continue to be drawn into the tax system year after year.'
Liberal Democrat MP Charlie Maynard condemned the threshold freeze as 'both wrong and unfair.' He told MPs: 'An estimated 600,000 people were dragged into paying income tax for the first time this April, and a further 580,000 were pulled into the higher 40p rate.'
Government Response
HMRC issued a statement saying: 'Anyone whose only income is the full new or basic State Pension without any increments will not pay income tax, and we are committed to that over this Parliament.' Despite this assurance, critics argue that the freeze will continue to pull more pensioners into the tax net as state pensions rise with inflation.
