Over half a million more retired people could be dragged into the “tax net” next year, according to a former Liberal Democrat pensions minister. Sir Steve Webb, who is now a partner at pensions specialists LCP (Lane Clark & Peacock), said frozen income tax thresholds, combined with pension increases next year, may potentially pull at least another half a million pensioners into the income tax net.
LCP looked at HM Revenue and Customs (HMRC) figures to make the estimates. It said that in April 2022 the State Pension rose by only 3.1%, yet as income tax thresholds were frozen the number of over-65s paying tax rose by 390,000 between the financial years 2021/22 and 2022/23.
With a much larger State Pension increase expected in April 2023, a bigger jump in the number of over-65s paying tax is expected. The April uprating is based on the September Consumer Price Index (CPI) inflation figure, which was 9.9% for August.
