Calls have been made to exempt State Pensioners from paying income tax. More than 14,000 have urged the UK Government to rethink current tax rules. Currently in the UK, those on State Pension are required to pay income tax if the money they receive is more than their personal tax allowance.
For most people, this allowance is £12,570 a year. This means you can receive £12,570 a year from your pension tax free.
It is the same rule for most people in employment as well. However, if you earn over £12,570, either through your job or your State Pension, you will be taxed 20 per cent on every pound over that limit.
The rates go up incrementally if your income or pension exceeds £50,270 a year. But some members of the public are asking Government to waive income tax for pensioners.
In a petition submitted to Parliament, they said: “Make the state pension tax exempt. We want the Government to make the state pension tax exempt and not impact the tax threshold.
« We think it is wrong to tax the state pension.” At the time of reporting, this petition had garnered 14,418 signatures.
In a response to the petition, provided by HM Treasury, the Government said all taxes remain “under review” but that this change could be “expensive”. It commented: “Exempting the State Pension from income tax would be expensive and add complexity to the tax system.
« Exempting the State Pension from income tax would be expensive at a time when the Government has inherited a very challenging set of fiscal circumstances. Individuals earning above the higher rate threshold would benefit more than those with incomes below, and those earning below the Personal Allowance would not benefit at all.
« The Government keeps all taxes under review as part of the policy making process. The Chancellor will announce any changes to the tax system at fiscal events in the usual way.”
If it reaches 100,000 signatures, the petition will be considered for debate in Parliament. It comes after a separate petition has called for the the UK Government to increase the personal tax allowance from £12,570 to “at least £25,000” to help support pensioners in retirement.
The Labour Government announced earlier this year that the Personal Allowance will remain frozen at £12,570 until April 2028. Petition creator Rosemary Grey argued that raising the income threshold would “support our older citizens, many of whom have already contributed by paying tax during their working life”.
This petition has garnered 1,141 signatures, meaning the Government has not provided a response.
