HMRC’s latest figures indicate that 8.7 million people over the state pension age are forecasted to be paying income tax during the current tax year, a spike of 420,000 from the previous tax year. The consistent increase in retirees liable for income tax is expected as long as the triple lock mechanism and frozen personal allowance thresholds remain unchanged, leading to a situation known as fiscal drag.

Talking to Business Matters, head of policy at consultancy Broadstone David Brooks, said: “While the country’s demographic shift naturally increases the number of pensioners liable for income tax, fiscal drag is unequivocally pulling hundreds of thousands more into the income tax bracket each year.”

The triple lock promise ensures that the state pension amount is boosted annually by the highest figure out of wage growth, inflation, or a set minimum of 2.5 per cent. Meanwhile, the personal allowance threshold, how much someone can earn before they must pay the basic income tax rate of 20 per cent, has been fixed at £12,570 since 2021.

With the full new state pension providing £11,973 currently, recipients have a narrow margin of just £597 in other earnings before they need to pay a 20 per cent tax on additional income. According to HMRC figures, 8.5 million pensioners are already above the £12,570 threshold and are paying income tax.

However, as the triple lock continues to significantly increase the state pension each year, this number is set to rise exponentially. Even if the state pension only increases each year by the minimum allowed under the triple lock, which is 2.5 per cent, it could become a taxable benefit by April 2027.

Fidelity estimates that the state pension will reach £12,579.13 at this point. However, the situation may not be as severe as these figures suggest.

Previously, HMRC confirmed to the Telegraph that it is prepared to forgive some tax bills as it “will not pursue hundreds of thousands of pensioners for tiny amounts”.

For instance, those who only receive the state pension in 2027 will be just £9.13 over the threshold. Therefore, their tax bill would be less than £2.

Unlike other forms of earnings where income tax is collected at the source of payment, tax on state pensions needs to be paid manually by the taxpayer. This process begins with HMRC sending them a demand letter, also known as a simple assessment, to inform them of how much they owe, but this process requires time, effort and money.

A spokesman confirmed to the outlet at the time: “We will not normally issue simple assessments for tax that would cost more to collect than is owed. That would not be a good use of public funds.”