Many state pensioners will be paying back the equivalent of their entire £200 winter fuel payment in income tax by the end of the decade, should the Chancellor extend a freeze on tax thresholds at the Budget, analysis shows.

The £12,570 threshold at which people start owing income tax at a rate of 20 per cent has been frozen since 2022. If this continues, and the state pension continues to increase, retirees will start owing tax on it within the next two years.

By 2030, analysis from Quilter shows that growing tax bills will wipe out the £200 winter fuel cash boost many receive.

The Government removed universal winter fuel payments for most households last year and then reinstated them – but with means-testing – amid heavy criticism.

Currently, those born before 21 September 1959 get

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