12.5million pensioners are being trapped in a so-called two-tier state pension system. Basic state pensioners are being caught out by tax bills, and forced to pay the Labour Party government’s tax arm cash.
One pensioner, Dave Morgan, spent 43 years as a building surveyor. Dave has hit out after the Labour Party government froze the personal tax-free allowance at £12,570 until April 2031.
Chancellor Rachel Reeves confirmed anyone whose sole income is the basic or new Department for Work and Pensions ( DWP ) state pension would not have to pay tax from 2027/28 if the amount they receive exceeds the personal allowance.
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But Dave, 72, has a modest private pension, meaning he is one of 12.5million who will miss out. Critics have branded the move “brutally unfair” as it creates a two-tier state pension system.
Dave, of Clacton-on-Sea, Essex, said: “It’s not fair. It should be either everyone or no one that benefits.”
Dennis Reed, founder of campaign group Silver Voices, said: “Taxing any element of the state pension is brutally unfair as this is supposed to be a safety net paid for throughout your working life.
“It is callous, as it will create so many anomalies.” Dave said: “I’ve always paid my taxes and worked hard six or seven days a week. We did everything we were asked of.”
A second pensioner, who faces a tax bill from HMRC worth £1,958 a year, said: “I don’t think it’s fair that some people will benefit while others will not.”
They spoke out and explained they take home £414 a week in old state pension — equivalent to £21,528 a year — and £8,958 over the personal allowance.
After his wife Mary died in January, they were given an extra £16 a week, bringing the total income to £22,360 a year.
A Treasury spokesman said: “Anyone whose only income is the full new or basic state pension without any increments will not pay income tax and we are committed to that.”
Former pensions minister Sir Steve says: “Most pensioners today pay income tax, and that proportion is rising yearly.”
