The Chancellor has been under pressure over the issue
Chancellor Rachel Reeves.(Image: PA)
Rachel Reeves has made a tax promise to millions of state pensioners.
Frozen tax bands meant more pensioners faced the prospect of paying income tax over the next couple of years.
The state pension rate is due to pass the personal allowance – the point at which someone starts paying tax – in 2027.
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Chancellor Rachel Reeves has now announced people whose sole income is the state pension will not have to pay tax.
However, those with only small private pensions will be taxed.
Working people who earn the same amount as these pensioners will also have to pay income tax, which could spark accusations of favourable treatment for older Brits.
Pressure has been building over the state pension income tax issue over recent months.
Tax bands have stayed frozen since 2021 and the freeze was extended by Ms Reeves at the Budget last week.
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That means more households will pay more tax as their earnings increase and they enter new tax bands.
The Chancellor confirmed if the state pension was the only source of income people had, they would not have to pay.
And she later said in an interview with money campaigner Martin Lewis that “in this Parliament, they won’t have to pay the tax”.
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