Avoid the pensioner tax trap – six ways to reduce your tax bill in retirement

The full new state pension rose by £470 a year from April, but with income tax thresholds still frozen, you could find yourself giving more away to the taxman. We look at ways to cut your bill.

Retired couple mountain biking
(Image credit: Halfpoint Images via Getty Images)

The state pension rose by 4.1% this April in line with triple lock rules, bringing the annual figure to £11,973 for recipients of the full new state pension. This is within touching distance of the tax-free personal allowance of £12,570.

An increasing number of pensioners are finding themselves paying tax in retirement as other sources of income push them over the threshold. This will only be compounded further going forward thanks to the effects of fiscal drag.

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Katie Williams
Staff Writer

Katie has a background in investment writing and is interested in everything to do with personal finance, politics, and investing. She enjoys translating complex topics into easy-to-understand stories to help people make the most of their money.

Katie believes investing shouldn’t be complicated, and that demystifying it can help normal people improve their lives.

Before joining the MoneyWeek team, Katie worked as an investment writer at Invesco, a global asset management firm. She joined the company as a graduate in 2019. While there, she wrote about the global economy, bond markets, alternative investments and UK equities.

Katie loves writing and studied English at the University of Cambridge. Outside of work, she enjoys going to the theatre, reading novels, travelling and trying new restaurants with friends.