Some 93,000 pensioners were fined for filing their tax returns late in 2024-25, as the Treasury admitted it has made no forecast of how many more will have to fill them in.
Ministers also gave no figures when asked how many pensioners will face tax bills of under £50, or what it costs to collect them, pointing instead to a new allowance worth at most £94 a year.
The figures came in written answers from Treasury minister Torsten Bell to Conservative MP Peter Bedford, published on Tuesday.
Mr Bedford asked how many people over state pension age will have to complete a Self Assessment return for the first time, how many will receive a Simple Assessment demand for less than £50, for £50 to £100 and for £100 to £200, what each one costs HMRC to issue and collect, and what cost-benefit analysis had been done.
Several of the questions received the same reply. “HMRC has not estimated the number of people over State Pension Age who will be required to complete a Self-Assessment tax return for future years,” Mr Bell said, adding that producing the figures “would require forecasting individual yearly circumstances over several tax years”. No figure was given for how many small bills there will be, or for the cost of collecting them.
The minister did confirm that 93,000 people over state pension age received a penalty for late submission of a Self Assessment return in 2024-25. HMRC says that if someone tells it they did not need to file, and has not yet done so, it will review the case and can withdraw the notice and cancel the penalty.
Mr Bell also took a swipe at the Opposition. “The vast majority of pensioners paid income tax under the last Conservative government,” he wrote.
That is fair as far as it goes. Most pensioners with a private or workplace pension have long paid tax, and the freeze on the £12,570 personal allowance was announced by Rishi Sunak as Chancellor in 2021.
But Labour is now the Government, and at Budget 2025 it extended that freeze until April 2031. Meanwhile the triple lock keeps lifting the state pension towards and above the tax-free allowance. From April 2027 the full new state pension will be £13,036.40 a year.
Ministers’ answer is the Pension Tax Allowance. Under it, pensioners whose total income is no more than the full new state pension will not be brought into tax by state pension rises. HMRC estimates it will take around 290,000 pensioners out of tax in 2027-28, rising to almost 600,000 by 2029-30, and spare more than 200,000 a Simple Assessment bill in its first year.
But the allowance is worth at most £94 a year. It is withdrawn by £1 for every £3 of income above the full state pension, so a pensioner with a little extra income pays 60p in tax and loses £1 of allowance on each additional £3, an effective rate of 53 per cent, until it runs out at £13,319.
It is also legislated for only three tax years, to April 2030. Official guidance says the Government will “consider any arrangements beyond 2030 in the usual way”.
The numbers already caught are not small. HMRC projects that around 1.4 million people have the state pension as their only income this year. Of those, around 1.2 million will not be liable to income tax, which implies about 200,000 will be, according to a separate answer to the DUP MP Gregory Campbell.
Pensioners whose tax cannot be taken through PAYE are usually billed through Simple Assessment, in which HMRC works out the tax and sends a demand, though some must file a full return. Ministers have not put numbers on either.
The questions for the Treasury are simple. How many pensioners will be sent a tax demand for less than £50, and what does it cost to collect one? How many will be asked to file a full return for the first time? And what happens to the allowance after April 2030?
Next April the full new state pension will rise to £13,036.40. The personal allowance will still be £12,570, and on Labour’s plans it will stay there until 2031.
