Labour's focus on taxing our Old Age Pensioners

 We are now in a new fiscal year and the new state pension for OAPs comes into effect. 

Many pensioners will now suddenly find they are now paying tax on their pension. Labour has had to resort to taxing pensioners as taxing the rich hasnt worked - they have simply moved to Italy or other tax friendly countries.

Last year the state pension was £230.25 per week or £11,973. From April 2026 the state pension has increased by a 4.8% to £241.30 or £12,547.60 per year.

The tax free personal allowance has been frozen at £12,570 since April 2021 and Rachel has generously frozen it until April 2031.  A decade of fiscal drag where inflation will erode the earning parity.

The pension has increased by 4.8% as a result of the triple lock despite CPI inflation being 3.4%. The reason it has increased so much is the aspiration to ensure our pensioners income keeps pace with wage inflation.  This large increase has been triggered by high wage growth however wage growth in the wealth creating private is significantly lower than  4.8%. The wage increase in the private sector was 3.6% and most of that was caused by the  massive increase in minimum wage in April 2025. However our government has very generously given our non wealth creating  public sector workers  a whopping 7% - 7.9%  pay increase in 2025. This yielded the average wage growth of 4.8%.  As more people now work in the public sector than private sector - this is the consequence.  

So pensioners are winners out of this.

However with the pension now very close to the tax threshold of £12,570 many pensioners will be paying tax on savings and other modest income. 

We are entering a period of high inflation - likely to be 4%+. With the triple lock that means the state pension will rise by at least that. So let's see what happens to the tax our OAPs are going to pay:

You can see that our silver surfers will soon be paying 3%+ of their "benefit" in tax.  So Labour on the one hand argue that the state pension is a benefit that should be subject to tax but argue that other benefits are not subject to income tax.  I would argue that the state pension is not a benefit - it's a liability without provision because it's a Ponzi scheme. All governments have failed to invest the state pension contributions or even ring-fence them.  If this was a private company doing this they would go to prison.....






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