I’m A State Pensioner Still Working – Income Tax Hikes Will Make Life ‘impossible’

Any tax rises announced in the Budget would “cripple” pensioner Jules Ackerman.

The 74-year-old, who lives in the south west of England, began claiming her state pension in 2016, at the age of 65.

The payment provides her with over £12,000 per year and she gets a very small private pension too.

But she has decided to remain in part-time work to supplement her income, and as a result, earns over the £12,570 threshold at which people start paying tax – and so any additional work she does is subject to 20 per cent income tax.

Earlier this month, rumours circulated that the Chancellor was preparing to break Labour’s manifesto commitments by raising income tax to help fill a £30bn hole in the public finances.

Although these suggestions have since been dismissed, Rachel Reeves may still decide to extend the freeze on income tax thresholds, which is due to end in 2028, to 2030.

The threshold at which people start owing 20 per cent income tax has been frozen at £12,570 since 2022. This freeze is due to end in 2028, but there have been suggestions it could be continued until 2030.

Freezing thresholds means as incomes and pensions rise to keep pace with increasing costs, more pensioners and workers are pushed into paying taxes, while those earning above the threshold already – like Jules – face paying tax on a bigger portion of their income.

Speaking to The i Paper, Jules, who has spent her life working in admin, catering, care, and nursing, explained: “I had no idea that I would still be working now, but then, most of us do not know how our lives are going to progress.

“Pensioners are taxed on their state pension as income. Raising income tax will just cripple us and make it impossible to cover costs and fully benefit from our earnings.

“I feel that pensioners have paid their dues over the years and every ‘perk’ they thought they were given has been taken away. There are no ‘thank yous’ for having supported the country.”

Jules’s weekly income combines £230.25 from the new state pension, £9.71 from a private NHS pension, and whatever extra she earns through her pet-sitting business.

Even with this, she says she would “struggle” if she stopped working, as she is already having to tighten her spending.

She said: “My shopping for food is budgeted. I eat well for what I need and work out my shopping list to overlap with different meal needs, without getting into complicated and expensive meals.

“I limit even going out for coffee, or light meals with friends or family. Thank goodness, we grew up with wasting next to nothing, living off the allotment, making ‘ends meet’ and relying on ‘hand me downs’ and being economical.

“I go to charity shops – I give to charity shops as much as I can – I share what I find and enjoy that. I support charities I care about and worry that this will change should I not be able to boost my pension income.”

If the freeze on tax thresholds is extended beyond April 2028, Jules fears she risks facing bigger tax bills on her earnings.

At that point, she says she would consider giving up work altogether, as a growing proportion of the income she earns would go back to the taxman.

But she says she wants to avoid that as work keeps her active and supports her mental and physical wellbeing.

She added: “If I have to make choices, dependent on my income, it may very well mean either selling up my modest home, or renting out, and living entirely in a static caravan.

“I only need what I need but would like to feel I can still enjoy a quality of life that isn’t extravagant, but peaceful and manageable,” she added.