Rachel Reeves' stealth tax raid that will cost pensioners £3,000

Pensioners will pay almost £3,000 in extra tax by 2028 thanks to raid on incomes, analysis shows. The amount you can earn before paying , known as the personal allowance, has been frozen at £12,570 since April 2021.

The Chancellor has said , which should see the tax threshold frozen until April 2028. If the personal allowance had risen with inflation, then it would have been on course to rise to £16,290 by the 2027-28 tax year. So during the six year freeze a pensioner with a typical income of about £30,000 per year will pay £19,998 in tax compared to £17,038 had the threshold risen with - a difference of £2,960, according to analysis.

The continued freeze means millions more taxpayers are forced to pay tax or are moved into higher tax brackets, a process known as "fiscal drag."

This is when people are dragged into a higher tax bracket if their salaries rise, but thresholds for tax rates remain the same.

The Resolution Foundation thinktank warned earlier this month that households face a "triple hit" from the impacts of tax, utility bill increases and benefits not keeping pace with the cost of living.

It said the long-running freezes to personal tax thresholds will mean some people are dragged into paying more tax, while employer national insurance (NI) hikes will feed through to households through slower wage growth as employers recoup costs.

Rising utility bills and council tax will pile further pressure on household budgets, according to the think tank. It described national living wage increases as a "chink of light in an otherwise gloomy outlook".

While refusing to change the timeline, Ms Reeves said during her maiden Budget the Triple Lock would rise by more £31billion by 2029-30 to "ensure pensioners are protected in their retirement".

She said it means while working age benefits would be uprated in line with the consumer price index measure of inflation at 1.7%, the basic and new State Pension will be uprated by 4.1% in 2025-26.

The Triple Lock means the State Pension will rise by either the rate of inflation or average earnings or 2.5% - whichever is the highest.

On the impact of fiscal drag on Britain's pensioners, Jon Greer, from wealth management company Quilter, said: "Pensioners are being quietly dragged into the tax net thanks to years of frozen thresholds and rising income.

"What might once have been seen as a modest retirement income is now being taxed more heavily each year, all without a single change to the tax bands.

"The result is a stealth raid that many pensioners simply won't have planned for. While it might not feel like a tax rise, for those living on fixed incomes, the financial pressure is very real."

A Treasury spokesman said: "We are committed to help our pensioners live their lives with dignity and respect, which is why we have frozen fuel duty and increased the State Pension to leave pensioner couples up to £88 better off a month.

"Our commitment to the triple lock means millions will see their pension rise by up to £1,900 this parliament."