State pensioners sent new HMRC warning

Fears more pensioners could be dragged into paying tax

More state pensioners could be dragged into paying income tax over the coming years and be left with less money in their bank accounts, experts have warned. That's because Chancellor Rachel Reeves is reported to be considering extending the freeze on tax thresholds.

It's currently already due to remain in place until 2028 and could now be pushed beyond then up to the next election. The freezing of thresholds has been dubbed a "stealth tax" by critics as households lose more of their money to tax as their pay increases.

It means workers get dragged into higher income tax bands as the years pass and they earn more money. There have been concerns about the impact on pensioners of these measures.

READ MORE: All state pensioners told there will be no bonus payment this year

Get our best money saving tips and hacks by signing up to our newsletter

The triple lock guarantee ensures the state pension rate increases every year and as a result more older people have found their income going beyond the tax threshold, meaning they start to lose money to the taxman, lessening the impact of any pension increase.

The BBC reports around 400,000 more people will find themselves paying income tax at the basic rate if threshold freezes are extended. Ms Reeves will announce Labour's first Budget in 15 years on October 30 and she has been desperate to find ways to raise money without increasing income tax, National Insurance paid by workers or VAT, which have all been ruled out.

It is expected employers will have to increase National Insurance contributions. Extending the freezing of thresholds will likely put Labour under more pressure over its pledge not to increase taxes on working people.