Experts warn that, if tax is due on the state pension, thousands of people delaying retirement to boost their income could inundate Westminster with additional confusion and paperwork.
Andrew Tully, of Canada Life, said: “If state pension income starts to exceed the personal allowance, individuals would need to complete a self-assessment return and submit it to HMRC, which could cause confusion and greater bureaucracy.
“If this were to happen with much greater frequency due to the freezing of the personal allowance, the Department for Work and Pensions and HMRC may need to work together to deduct tax from the state pension.”
The elderly have been among the hardest hit during the cost of living crisis, with around one in three turning off the heating this winter due to soaring energy bills, according to research from the charity Age UK.
Pensions minister Laura Trott told MPs this week that pension credit claims have tripled since the summer, up from 2,000 to 6,000 per week, as retirees scramble for extra support to survive the worst cost of living crisis in a generation.
