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CAMPAIGNERS ARGUE THE TAX SYSTEM IS UNFAIRLY PUNISHING PENSIONERS 09:28, 03 Jun 2025 Pensioners who have just small private pensions have been warned they may now face being taxed by HMRC
under "unfair" rules. More older people are being dragged into paying income tax because of the frozen personal allowance tax band. The personal allowance is the amount someone can
earn before they start paying income tax, and it's currently set at £12,570. READ MORE: PENSIONERS WHO LOST WINTER FUEL PAYMENTS SENT NEW £300 UPDATE GET OUR BEST MONEY SAVING TIPS AND
HACKS BY SIGNING UP TO OUR NEWSLETTER But annual increases to the state pension mean more people are being pushed towards or over this threshold. Article continues below While the state
pension itself is below the limit, it now takes only modest private pensions or other income streams to put someone beyond the £12,570 figure. It's leading to growing calls for the
personal allowance to be raised to protect pensioners, though this has been ruled out by the Government. The level has been frozen since 2021 and that is currently set to remain the case
until at least 2028. Campaigners argue it is unfair for pensioners' income to be taxed after paying into the system to fund their own pensions during their working lives. Pension
experts at Spencer Churchill Claims Advice said: "There’s growing frustration among pensioners who feel that taxing the state pension - after a lifetime of National Insurance
contributions - is fundamentally unfair. "While many retirees don’t exceed the personal allowance, a rising number with modest private pensions are being pulled into the tax net. The
current petition reflects a wider call for reform. "The Personal Allowance freeze until 2028, despite rising state pension payments, means more pensioners will cross the tax threshold
each year. "What we’re seeing is ‘fiscal drag’ in action - where people end up paying more tax even though their real income hasn’t meaningfully increased." The expert added:
"While making the state pension tax-exempt may seem like a simple solution, it would complicate the tax system and potentially cost the Treasury billions. Article continues below
"A more balanced approach might be to increase the Personal Allowance for retirees or introduce a pensioner-specific tax band.” “There’s often confusion around when and why pensioners
pay tax. "“It’s important to remember that income tax is only applied to earnings above £12,570. For many, it’s not the State Pension itself that triggers tax - but the combination of
state and private pensions.”