Money Tax Smart

Pensioners in the UK who rely mainly on state benefits are facing increasing financial pressure due to tax changes. In the March 2021 Budget, the government froze the Personal Allowance at £12,570 and the higher tax threshold at £50,270 until 2026. This means that as pensions and other incomes rise, more pensioners will have to pay tax.

According to the Office for National Statistics (ONS), freezing tax allowances means more people will move into higher tax bands over time. As a result, many pensioners will start paying tax for the first time, while others will see their tax bills increase.

To reduce the impact, pensioners should check if they qualify for tax reliefs or allowances. Claiming the right tax benefits can help lower their tax bill and protect their income.