Warning half a million more retired Britons to be dragged into paying tax

But the uplift risks leading to pensioners being forced to pay a levy on their income.

After the payment increases those on the New State Pension receive £203.85 each week and those on the Basic State Pension will receive £156.20.

This means those who get the full New State Pension will receive an annual income of £10,600.20 - just £1,969.80 off the Personal Allowance cap.

The Personal Allowance is frozen at £12,570 for the 2023/24 financial year and anyone who earns more than that will have to pay tax on it.

Former Liberal Democrat pensions minister Sir Steve Webb warned recently that anyone who earns habit more money alongside their state pension will therefore risk being forced to pay tax.

Webb said: “Freezing tax thresholds is a stealthy way of raising tax at the best of times, but at a time of soaring inflation, freezing thresholds has a profound effect.

“During this Parliament we have already seen over a million extra pensioners dragged into the tax net, and April’s increase is likely to add at least half a million more.

“If the Chancellor is looking for ways to cut taxes and ease cost of living pressures on those on modest incomes, he could do worse than review the long-term freeze of income tax allowances.”

At the time a Treasury spokesperson said: “Over the last decade we have increased the personal allowance people have before they pay any income tax from £6,475 in 2010 to £12,570 today.

“This has lifted millions of the poorest out of paying any income tax at all, and meant a real-terms tax cut of £750 for 27 million people.

“The vast majority of taxpayers will still pay the basic rate and the UK still has the highest personal allowance in the G20.”

Chancellor Jeremy Hunt will deliver his Budget in the House of Commons next Wednesday.

Any change to the personal allowance cap would be unveiled when he gives his fiscal update to MPs.