Politics

Starmer Grilled Over ‘Retirement Tax’ as Frozen Thresholds Drag Pensioners Into Tax Net

Published on July 10, 2025

Keir Starmer has been put on the spot over growing concerns that more pensioners are about to be hit with what’s being dubbed a “retirement tax”, as frozen tax bands continue to push older Brits into the income tax net.

The issue came up during Prime Minister’s Questions when Conservative leader Kemi Badenoch challenged Starmer directly, accusing Labour of dragging millions of struggling pensioners into paying tax on their retirement income for the very first time. She called the frozen personal allowance threshold a “retirement tax” and didn’t hold back.

The personal allowance – the amount you can earn before paying income tax – has been stuck at £12,570 since 2021 and is set to stay that way until at least 2028. But while the allowance has stayed the same, pensions and incomes have been slowly rising, meaning more and more older people are being nudged closer to or beyond the threshold and now finding themselves liable for tax they never used to pay.

Badenoch said: “Under Labour, millions of our poorest pensioners face being dragged into income tax for the first time ever. Does the Prime Minister think it is right that struggling pensioners should face a retirement tax?”, reported London Evening Standard.

But Starmer didn’t give a straight yes or no. Instead, he insisted Labour would honour what’s in their manifesto and stick to their financial promises. He said: “For a Prime Minister or Chancellor to say we’re not going to write a Budget in advance isn’t a Labour thing or a Tory thing. Every single Prime Minister or Chancellor says they won’t. We will stick to our manifesto commitments, we will stick to our fiscal rules.”

He also took a swipe at the Tories, saying their handling of the economy is what caused the mess in the first place, adding: “This is a language they don’t understand. That’s what got us into the problem in the first place.”

So while Labour is trying to stay firm on keeping things financially responsible, many pensioners are left wondering what’s next for them – and if their retirement income will be taxed more heavily in the years ahead. With the threshold frozen for several more years, the fear is that inflation and modest increases to pensions will quietly pull thousands more older people into paying income tax, even if they’re just scraping by.

For now, Starmer’s message is that Labour won’t be rushing into tax decisions before a proper Budget is laid out, but that hasn’t stopped concerns from growing – especially among pensioners already struggling with the rising cost of living. The spotlight is now on what steps, if any, will be taken to shield retirees from tax bills many of them never expected to face.

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