Many pensioners could be affected by changes to the tax system, including the rising state pension and new rules for savings interest. The full rate state pension is expected to increase to £251 a week, topping £13,000 annually from next spring under the triple lock guarantee. This will bring it above the income tax threshold for the first time.
While those receiving the full new state pension as their only income will be exempt, individuals with even a small amount of additional income from private pensions, savings interest, or other sources could become liable for tax. Those on the old state pension who exceed the threshold will also not be excused. They may receive a bill under 'Simple Assessment' rather than needing to complete a full tax return.
HMRC receives information on savings interest from banks and building societies. Previously, tax was often collected automatically by adjusting tax codes. However, individuals earning more than £10,000 in savings interest are now required to complete a self-assessment tax return.
Further tax changes are planned for April 2027, with income tax rates on savings and property income set to increase by 4 percentage points. This will take the basic, higher, and additional rates to 24 per cent, 44 per cent, and 49 per cent respectively.