![\"HMRC](\"https:\/\/www.newsbeep.com\/il\/wp-content\/uploads\/2026\/03\/hmrc-office-london-6819763.jpg\" "\\"HMRC")
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HMRC will send a new tax code letter to those eligible (Image: Getty)<\/p>\n
State pensioners can increase their vital tax-free Personal Allowance limit by making use of two little-known but fully legal HMRC rules at the same time, if they are eligible.<\/p>\n
Right now, the income tax Personal Allowance is still frozen in place at \u00a312,570 and will remain stuck at that level until at least 2031, by which point it will have been sat at the same limit for a full decade, while earnings and indeed the state pension<\/a> continue to creep up due to inflation and the triple lock<\/a>.<\/p>\n After the Budget, Rachel Reeves<\/a> confirmed that state pensioners who do not receive any other income apart from the state pension will be exempt from paying income tax if they exceed the threshold, which is due to happen in April 2027 following another triple lock increase.<\/p>\n But there are plenty of pensioners who will still be liable to pay tax on their pension and other earnings because they don’t rely solely on the state pension.<\/p>\n The state pension has always been taxable, but those who earned less than \u00a312,570 never had to worry about it, as you don’t pay income tax on earnings below this Personal Allowance threshold.<\/p>\n READ MORE: Martin Lewis names 2 top Cash ISAs to open before April to beat your bank <\/a><\/p>\n READ MORE: Experts give ‘vitally important’ Cash ISA update to anyone with savings <\/a><\/p>\n But with the state pension just \u00a322 away from the threshold from this April, many who earn other income, such as savings interest, or are still in work, will exceed that threshold and, because they have other earnings, will not be exempt from tax.<\/p>\n However, there are two key HMRC<\/a> allowances that can help with this: the Marriage Allowance and the Rent-a-Room scheme.<\/p>\n Married couples can boost their Personal Allowance by 10% thanks to Marriage Allowance, a legal tax<\/a> reduction vehicle offered by HM Revenue and Customs.<\/p>\n Those who are married, or in a civil partnership, can transfer some tax allowance between one another in order to avoid some tax.<\/p>\n One of the couple needs to be a non-taxpayer, i.e. earning under the \u00a312,570 allowance, and the other must be a 20% taxpayer, earning above it. This is a fairly common situation for pensioners, where, for example, one person has retired but the other is still working.<\/p>\n The non-taxpayer pensioner then applies to HMRC to transfer 10% of their allowance to their taxpayer husband\/wife.<\/p>\n This transfers \u00a31,260 of their tax allowance to their partner, boosting the recipient\u2019s tax-free allowance by \u00a31,260 to \u00a313,830 instead of \u00a312,570. It saves approximately \u00a3252 in a single tax year, and it can also be backdated for four more years, which is paid to you by cheque.<\/a><\/p>\n