Frozen Tax Thresholds Mean Pensioners On Low Incomes Are Likely To Have To Pay Taxes

Six years of frozen tax thresholds mean more pensioners on low incomes are likely to have to pay taxes. Pensioners could near the 20% basic rate tax band with no increase in tax allowance until 2028.

Six years of frozen tax thresholds mean more and more pensioners on low incomes are likely to have to pay taxes on their incomes in the United Kingdom. Reports say the sum increases annually due to three factors— the wage, the inflation, or the 2.5%. However, with the frozen tax thresholds until 2028, pensioners could head closer to the 20% basic rate tax band.

According to Sheldon, the Head of Pension and Savings Interactive Investor Alice Guy explained that the frozen tax thresholds could result in the incomes rising with inflation but with the thresholds remaining the same. To date, the threshold for paying taxes is at £12,570. This suggests that any income above that threshold will be taxed at 20% until the income reaches a higher tax band.

READ ALSO: Pennsylvania Property Tax/Rent Rebate Increased By Governor Shapiro: See Who Qualifies!

Impact of Frozen Tax Thresholds

An article in Ground News states that Guy further explained that the frozen tax thresholds are indirect taxes as not many individuals take notice of them. However, during high inflation, Guy states that it is an effective policy that will heavily impact an individual’s spending power.

Further reports say to date, the full new state pension is at £203.85 a week or around £10,600 per year. On the other hand, the full basic state pension is at £156.20 a week or around £8,122 per year.

READ ALSO: Budget Agreement Struck; Reinstates Sales Tax Holiday For School Supplies And Adds Tax Rebates