Rachel Reeves confirms workaround for pensioners facing state pension tax bill
The government has acknowledged that the full new state pension will soon exceed the tax-free personal allowance, potentially causing many pensioners to face unexpected tax bills.
Key points
- The new state pension amount is rising and will eventually surpass the annual tax-free personal allowance.
- As a result, more pensioners could become liable to pay income tax on their state pension.
- Rachel Reeves highlighted a government-approved workaround to help pensioners manage the tax implications.
What Rachel Reeves said
"With the new state pension set to breach the tax-free allowance, the government is working on practical solutions to ease the tax burden on pensioners."
This statement signals official recognition of the impending tax challenge for retirees relying on state pensions.
Implications for pensioners
As pension amounts grow, pensioners who did not previously pay tax on their state pension may now find themselves with tax bills. The workaround aims to reduce this financial strain, although specific details were not disclosed in the source.
Author's summary: Rachel Reeves announced that the government is preparing a practical solution to help pensioners avoid unexpected tax bills as the state pension surpasses the tax-free threshold.
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