HMRC warning issued to pensioners who may face unexpected tax bill for this reason
State pensioners who received money from the DWP have been issued a fresh warning that they could owe money.
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Pensioners have been told to double check if they could potentially owe tax to the HMRC due to state pension changes.
The state pension has risen to £11,502 a year from this month, just £1,068 below the personal allowance of £12,570, meaning more and more pensioners will have to start paying taxes.
The new full state pension now makes up 92 percent of the tax threshold, with the full basic state pension (£8,814 a year) covering 70 percent of the threshold.
Pensioners claiming additional support on top of the state pension like State Earnings-Related Pension (Serps) could easily be pushed past the tax threshold.
Since 2010 the number of pensioners paying taxes has doubled, soaring from 4.5 million to 9 million.
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In a column for the Yorkshire Post, Ros Altmann, a former Pensions Minister turned campaigner expressed her concern that millions of pensioners may not be aware that they have passed the tax threshold.
Ms Altmann also warned that those that share their pension with their partners have a lower personal allowance of just £11,310.
Ms Altmann said: “More are now at risk of being hit with fines and penalties for not paying a tiny amount of tax they never knew was due. Most of those tipped into tax will be poorer pensioners with little more than their state pension to live on.
“The DWP should send out clear notification to everyone receiving State Pension notification letters, warning them that they should check their tax position and DWP/HMRC should consider national advertising and a media campaign.
“Careful reform could alleviate some of the social problems, either by better liaison between HMRC and other Government Departments but also by ensuring that people can pay any tax due easily and that they know what their responsibilities will be. Currently, this is not happening."
In her column Ms Altmann wrote that the Government should raise the personal tax threshold in line with inflation to protect pensioners.
She also called on the HMRC to improve its communication with people collecting their pension and provide adequate support to elderly people with “no digital access” and who “cannot use online services easily”.
Similarly Ms Altmann recommended that the HMRC collaborated better with the DWP to ensure proper communication to the public about potential unexpected tax liabilities.