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An 80-year-old widow faces being hit with a 20 per cent tax charge on her state pension by Jeremy Hunt despite the Department for Work and Pensions (DWP) triple lock being in place.
GB News reader Charlotte Jones* is calling on the Chancellor to raise tax allowances so does not have to a sizable portion of her Widow’s Pension to HM Revenue and Customs (HMRC)
Speaking to GB News, Jones shared how she had hoped to leave her “small job”, which she has to supplement her income, when turning 80 but Mr Hunt’s policies mean this may not happen.
Jones explained: “Now that I am over the threshold by £289.12, I will have to pay 20 per cent tax on this amount.
“I have had a small job up until now and I thought I would be able to retire at 80 but this will not be the case if the tax stays at the same rate.
“Both my husband and I have worked all our lives and when he died, I continued with a small job but I didn’t expect to pay tax on my pension.”
Are you paying tax on your state pension? Get in touch by emailing money@gbnews.uk.
Pensioners face a sizable tax charge on their pension payments
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In a stark warning to Prime Minister, the longstanding Conservative voter is preparing to vote for the Reform Party in the next General Election if the situation does not “change swiftly”.
On March 9, 2024, the pensioner received a letter from the DWP informing her of how much her retirement benefits were increasing by.
Last year, the Chancellor confirmed the Government would freeze tax allowances until at least 2028 in what has been described by many as a “stealth tax”.
This is due to the impact of fiscal drag: when tax thresholds remain at the same level while incomes and wages rise.
As such, the tax-free personal savings allowance is likely to stay at £12,750 for the next couple of years unless Mr Hunt or a future Chancellor reverses this decision.
While workers are finding themselves dragged into higher tax brackets, pensioners are not immune to Hunt’s “stealth tax” raid.
With this year’s triple lock rate rise, the full new state pension has exceeded £11,000 a year for the first time.
While this is below the personal allowance’s threshold, a pensioner with even a small private pension pot could be pulled across the tax bracket.
For Jones, she is about to fall foul of the personal savings allowance purely through her Widow’s Pension alone.
Prior to this month’s state pension rate hike, the 80-year-old £916.56 per month which is about £11,915.28 for the year.
Thanks to the triple lock, this amount now rises to £989.24 every 4 weeks or £12,860.12 annually; with the pension payment set to be higher than the tax-free allowance.
This tax hike on the pensioner on the pensioner comes amid the ongoing cost of living crisis which has seen households forced to pay inflation-hiked prices for goods and record high energy bills.
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Chancellor Jeremy Hunt’s tax allowance freeze is hurting Britons’ retirement incomes
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Notably, she is concerned about her water and utility bills going up with more of her retirement income being taken by the tax man.
Jones added: “I do think Jeremy Hunt should raise the tax allowance immediately to, at least, £15,000 per year.
“My message Jeremy Hunt is that he is not living in the real world and has not taken into account that the widows pension comes in above the tax threshold so it is pointless raising the pension if it incurs a tax liability with all that entails.
“We are being taxed on a pension that we have already paid tax on. As it is our pension is lower than any other country in the EU so the present Government are not serving us well.”
GB News has contacted the Treasury for comment.
*Names have been changed
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