economy
State pension warning as retirees deferring payments set to lose tax exemption
Brits who delay drawing their state pension to earn more look set to have it taxed under new rules, according to reports. The state pension is due to rise above the personal tax allowance from next year. This means a portion of the state pension will be liable for income tax.
TL;DR
- Retirees who delay drawing their state pension may lose tax exemptions under new rules.
- The state pension is expected to rise above the personal tax allowance (£12,570) next year.
- Those who deferred claiming their state pension, and thus have 'increments', could be subject to income tax.
- Deferring the state pension increases it by approximately 5.8% per year.
- This potential tax on deferred pensions raises fairness concerns, as deferral has been promoted as a way to boost income.
- The government has stated that pensioners whose only income is the basic state pension without increments will not pay income tax.