Rachel Reeves is facing increasing pressure to raise the personal allowance to prevent Britain’s pensioners from being caught in an unfair “retirement tax” trap. Campaigners have raised concerns, warning that millions of retirees could be paying income tax for the first time due to the Chancellor’s decision to freeze allowances.
Silver Voices, a prominent pensioners’ advocacy group, has called for urgent action to protect those relying solely on the state pension from unexpected tax bills. The group is demanding an immediate increase in the personal allowance – currently set at £12,570 – by £1,000 from April, with further increases aligned to the pensions triple lock to ensure pensioners’ incomes remain safeguarded.
Dennis Reed, director of Silver Voices, has urged the Chancellor to take action in March’s spring spending review, cautioning: “Unless action is taken, the basic state pension will become taxable from April 2026. We are calling for an immediate increase in the lower tax threshold by £1,000 and for it to be updated annually in line with the triple lock to prevent pensioners from falling into taxation.”
Speaking to the Telegraph, he warned: “This is a looming crisis for the entire pension system. Every year, hundreds of thousands of pensioners are pulled into tax because of modest savings interest or a small workplace pension. The state pension is a financial safety net, and it is being compromised.”
New forecasts from Deutsche Bank predict the triple lock will push pensions up by 5.5% equivalent to a £600 increase, next year’s personal allowance freeze will drag nine million pensioners into the tax net starting April 2026, according to latest projections. Experts have sharply criticised Labour’s decision to maintain the tax thresholds—originally frozen by the Conservatives in 2021—as “Labour’s retirement tax.”
The triple lock, which is meant to ensure that pension incomes keep up with rising living costs, is now at risk of ensnaring pensioners due to Shadow Chancellor Rachel Reeves’ plan to hold personal allowances steady until 2029. Jan Shortt, general secretary of the National Pensioners’ Convention (NPC), has fiercely attacked the policy, saying: “The freeze on tax thresholds means that by 2028, only the very poorest pensioners will escape income tax. If thresholds had kept pace with inflation, they would be over £15,000 today.”
Her criticism didn’t stop there, with her asserting: “Taxing the state pension shows a complete lack of respect for older generations who have worked hard and deserve financial security.” Caroline Abrahams, charity director at Age UK, said: “This issue will only grow in prominence as more pensioners find themselves unfairly taxed. It makes no sense for the Government to give with one hand and take away with the other.”
Responding to the outcry, a government spokesperson sought to pacify concerns, emphasising: “The state pension ensures pensioners can live with dignity and respect. We are committed to the triple lock, which is due to rise by 4.1pc this year. Pensioners with only a new state pension and no deferred or protected payments do not pay income tax.”