Fury erupts at Keir Starmer over 'insulting' stealth tax against pensioners

Campaigners have warned Sir Keir Starmer that a stealth tax raid on the state pension would be an "insult" to older people. The Prime Minister has been accused of treating pensioners with contempt over the possibility of some who receive the new state pension paying incometax from next year.

Millions of Britain's poorest older people face being dragged into an "old-age tax trap" as Chancellor Rachel Reeves scrambles to fill a growing black hole in the public finances. Over-60s campaign group Silver Voices, with the support of the Express, handed in a petition to 10 Downing Street with 115,000 signatures in March calling for the state pension never to be taxed.

It called for the Chancellor to increase the tax threshold for state pensioners and to commit to increasing the tax threshold in line with the triple lock increases in future years.

But three months on, the Treasury has finally sent an unsigned reply which rejects "exempting the state pension and other benefits" from income tax.

Silver Voices' director Dennis Reed said: "This disdainful anonymous reply from the Treasury is an insult to all older people, and two fingers to the 125,000 signatories to our petition, and shows how low pensioner concerns are ranked in the Treasury view of the world.

"We worry that this anti-pensioner attitude will carry forward to the autumn budget and that the old age tax trap will be deepened by extending the freeze on lower tax thresholds until the end of this Parliament. Any continuation of the freeze will be seen as yet another betrayal of the older generations and as a sneaky way to undermine the value of the state pension and the Triple Lock.

"But we are confident that the public will support our aim to stop the basic state pension from being taxed, just like they backed us up over winter fuel and to save the triple lock."

HM Revenue and Customs has admitted that if the lower tax threshold remains in place, 3.4 million extra people over 70 years old will be sucked into the tax system for the first time over the next three years.

Mr Reed said: "We will redouble our efforts to get the lower tax threshold unfrozen, preferably for all, but, if not, for state pensioners. The old age tax trap must be ended this year".

Millions of people on the new state pension who have no other way to fund their retirement could start paying tax for the first time next year, reports this weekend suggested.

This is because the personal allowance - the amount of income someone can have before they start to pay tax - is stuck at £12,570 at least until 2028.

Meanwhile the state pension, which is currently at £11,973 a year, is on track to go over that limit because of the triple lock.

Under the system, the state pension increases by whichever is highest out of the rate of inflation, annual earnings growth or 2.5%.

If average earnings continue to grow at their current rate of 5.2%, next year's state pension will rise above the income tax threshold for the first time.

Therefore pensioners relying entirely on the state pension will need to pay the basic tax rate of 20% on any amount above the personal allowance limit. The exact figure they will need to pay will be confirmed later this year.

Chancellor Rachel Reeves is said to be considering an extension of the freeze on the personal allowance rate.

Former Pensions Secretary Esther McVey said: "It is pretty clear that this Labour government has a vendetta against pensioners. These proposals are just the latest in a long line of kicks in the teeth Labour have inflicted on pensioners.

Given that this Labour government has already run out of money, and has collapsed the economy, I am afraid that this financial punishment beating they are inflicting on the country is only going to get worse."

Ex-pensions minister Baroness Ros Altmann suggested the cost of administering the tax collection could outweigh the revenue raised.

She said: "The idea that the Government claws back tax from pensioners living on no more than the state pension could see millions of older people battling with the tax system for the first time in their lives. Many have said to me it feels like the Government is giving with one hand and taking back with the other. The threshold is set at a very low level relative to average earnings now as earnings have risen but the tax threshold stayed frozen. It is likely that many will owe just a few pounds in tax and the cost of administering the tax collection may well cost more than the revenue raised."

The Government is trying to plug an estimated £30billion gap in public finances, which has become more difficult after it faced a bruising defeat in the Commons last week over its welfare reforms.

Reform UK's deputy leader Richard Tice said: "This Labour government is hell-bent on hammering our pensioners at every turn. First, they tried to snatch away their winter fuel payments, now they're plotting to slap a tax on their state pensions. This is nothing more than a backdoor plot to effectively abolish the triple lock.

"It's clear that this government's priorities do not lie with the British people. They've got billions to surrender our own territory in the Chagos Islands and trillions to squander on their net zero madness, but they can't seem to find a penny when it comes to looking after British pensioners."

In response to Mr Reed's petition, the Treasury said: "The Government is committed to making sure older people can live with the dignity and respect they deserve in retirement. The State Pension is the foundation of the support available to them. Over the course of this Parliament, the yearly amount of the full new State Pension is currently projected to go up by around £1,900 based on the Office for Budget Responsibility's latest forecast."

The letter continued: "The previous Government made the decision to freeze the income tax Personal Allowance at its current level of £12,570 until April 2028. The current Government is committed to keeping people's taxes as low as possible while ensuring fiscal responsibility and so, at our first Budget, we decided not to extend the freeze on personal tax thresholds.

Exempting the State Pension and other benefits from income tax would add complexity to the tax system and those paying higher rates of tax would receive the greatest benefit.

"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.

It would also be expensive at a time when the Government has inherited a very challenging set of fiscal circumstances. Since taking office, the Government has taken a number of difficult but necessary decisions on tax, welfare, and spending to restore economic stability, fix the public finances, and support public services. 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."

A government spokesman added: "We are committed to help our pensioners live their lives with dignity and respect, which is why in April the basic and new State Pension increased by 4.1%. Pensioners will receive a boost of up to £470 to their income in 2025/26. Our commitment to the triple lock means millions will see their pension rise by up to £1,900 this parliament."

Yet again, this Labour government is taking aim at British pensioners. This time, Rachel Reeves has the state pension in her crosshairs, dragging millions of our poorest OAPs into a tax trap, slapping their pensions with basic rate tax once the state pension rises.
Labour swore to protect the triple lock, but this is a knife in the back for our elderly and will hit those that are the least well off the hardest. It's no wonder they call him Keir Starmer the granny harmer.
Pensioners are right to be fearful of this government. After pressure from Reform UK put an end to Reeves' original plans to scrap the winter fuel payments, she is still trying her best to squeeze every penny from pensioners.
This is just one in a series of election pledges that Keir Starmer and Rachel Reeves have broken one year into office. They've imposed tax rises on working people, increased energy bills and completely lost control of illegal migration - all despite promises to the contrary during the general election.
It's clear that Labour's priorities do not lie with the people of Britain. They have no issue forking out tens of billions of pounds to needlessly surrender the Chagos Islands to Mauritius. But when it comes to some of the most vulnerable, Reeves and Starmer treat them like cash cows rather than standing up for them.