State Pensioners Warned ‘You Will Have to Pay Income Tax’ If You Do 1 Thing
State Pensioners who defer their pensions to earn more cash may not be included in tax exemptions, it is feared. The Government's promise to shield retirees from paying income tax when the State Pension is uprated next year may not include the majority of those aged over 67.
TL;DR
- State Pensioners who defer their pensions may not benefit from upcoming tax exemptions.
- The full State Pension is expected to rise above the frozen tax-free earnings threshold next April.
- Government promised to protect retirees solely relying on the full State Pension from income tax.
- An industry study suggests only one in 18 pensioners are forecast to benefit.
- Those with increments on their State Pension, including for deferral, are expected to miss out.
- Deferring a pension adds 5.8% for each year of deferral, but this could negate tax benefits.
- Individuals with even small amounts of other taxable income might be disqualified from the waiver.
- Urgent clarity is called for regarding the tax waiver's application to deferred pensions.