A former heating engineer who worked gruelling overtime shifts for 50 years, retired last year expecting a tax-free state pension – but instead, he received an £800 tax bill.

Alan Perkins, 71, has an annual income of around £16,500—boosted by historical top-ups from the State Earnings-Related Pension Scheme (Serps, 1978-2002)—exceeds the frozen £12,570 personal allowance, triggering 20% tax on the excess.

Mr Perkins said: “I worked like a dog, leaving at 6.30am and returning at 10.30pm, plus weekend minicab driving. I barely saw my children grow up. Now, in retirement, they tax my pension. I never thought that would happen.”

Thousands of pensioners who rely solely on the State Pension are facing unexpected tax demands from HMRC, despite Chancellor Rachel Reeves’ pledge to shield low-income retirees from income tax.

Mr Perkins is among those already paying tax on the State Pension alone due to Serps or similar increments under the pre-2016 system.

The full new state pension, currently around £11,973 annually, is set to rise by 4.8% to £12,547 in April 2025 under the triple lock—still just below the allowance. However, by 2027, the standard payment is expected to breach the threshold for the first time.

Ms Reeves announced that pensioners whose “sole income is the basic or new State Pension without any increments” will be exempt from tax, even on tiny overages, to avoid “administrative headaches” chasing small sums. Critics slam this as a “cliff-edge” policy creating unfairness.

Sir Steve Webb, former pensions minister, said: “The proposed policy favours one very specific group for no very obvious reason. Two neighbours with identical incomes—one on the standard new pension, one on old basic plus Serps—could face different tax treatment. This is completely indefensible.”

Baroness Ros Altmann warned: “This policy is fraught with risks that will hit people on the wrong side of the cliff-edge, while others will not be affected at all.”

The Low Income Tax Reform Group has also urged Reeves to clarify details, warning the exemption risks being unfair and adding further complexity to the tax system.

The personal allowance freeze, started by Rishi Sunak in 2021 and extended by Reeves to 2031, continues to drive “fiscal drag,” pulling more low-income retirees into tax. Mr Perkins’ bill could hit £1,300 by 2031 under continued triple lock rises.

Mr Perkins mitigates his bill slightly via a marriage allowance transfer from his wife, whose pension is below the threshold.

He told the Telegraph: “This mess started with Sunak, but Ms Reeves’ exemption? Big deal—I’m already paying. Does she not realise people like me exist?”

Treasury sources confirm the exemption applies narrowly, excluding Serps-enhanced pensions.

Experts predict thousands more will be caught as pensions grow faster than thresholds, exposing tensions in a strategy which appears to protect some pensioners while punishing others.

Express.co.uk has approached HMT for comment.