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Pension warning as millions face HMRC tax bill they did not know was owed

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Millions of pensioners are being warned to check if they owe tax to HM Revenue & Customs (HMRC). The number of pensioners liable for tax has doubled from 4.5million in 2010 to more than nine million.

The state pension is rising to £11,502 a year from this month – just £1,068 below the personal allowance of £12,570. It means more pensioners will have to start paying tax on their pensions.

In a column for the Yorkshire Post, former Pensions Minister Ros Altmann said the new full state pension was now 92 per cent of the way towards the personal tax threshold. The basic state pension has risen to £8,814 a year – 70 per cent towards the threshold.

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But she warned millions of older pensioners also received additional state pension payments such as the State Earnings-Related Pension (Serps), State Second Pension (S2P), Protected Rights and Guaranteed Minimum Pensions. This means even a small amount of extra income from other pensions or savings could tip someone into tax liabilities, Mirror reports.

Ms Altmann raised concerns pensioners did not know they needed to pay taxes, particularly if they had never been liable before. She warned pensioners who were married or in civil partnerships and gave part of their personal allowance to their partner with ‘marriage allowance’ had an even lower personal allowance of just £11,310.

The former pensions minister said this would cause huge ‘distress’ to pensioners. She called on the HMRC and the Department for Work and Pensions (DWP) to notify pensioners of the risks.

Read More: Pension warning as millions face HMRC tax bill they did not know was owed

2024-04-17 19:04:00

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