The Personal Allowance will remain frozen at £12,570 until April 2030.
The Personal Allowance will remain frozen at £12,570 until April 2030.(Image: Getty Images)
The Department for Work and Pensions (DWP) has confirmed “those whose only income is the Basic or New State Pension without any increments will not have to pay income tax over this Parliament”. Under the Triple Lock measure, the full, New State Pension is on track to exceed the Personal Allowance threshold next year.
The Triple Lock ensures the State Pension increases each year in-line with whichever is the highest of average annual earnings growth from May to July, Consumer Price Index inflation rate (CPI) in the year to September or 2.5 per cent.
However, Chancellor Rachel Reeves announced the Personal Allowance will remain frozen at £12,570 until the start of the 2030/31 financial year, meaning New State Pension payments will be pushed over the tax threshold in the 2026/27 financial year.
READ MORE: Nearly half a million older people not due State Pension pay rise in AprilREAD MORE: Pensioners can claim two benefits which boost annual income to nearly £18,000
Pensions Minister Torsten Bell also said more details on how the UK Government will implement a system to ensure pensioners going over the threshold next year ‘by small amounts’ will be set out “in due course”.
The DWP Minister’s comments came in a written response to Conservative MP Mark Garnier who asked whether there are any “plans to require pensioners who received the State Pension as their only income and consequently inherit part of the Basic State Pension, the additional State Pension or the New State Pension following the death of their spouse or civil partner to pay income tax”.
Mr Bell responded: “The Chancellor has said that those whose only income is the basic or new State Pension without any increments will not have to pay income tax over this Parliament.
“At the Budget, the Government announced that it will achieve this by easing the administrative burden for pensioners so that they do not have to pay small amounts of tax via Simple Assessment from 2027/28.
“The Government will set out more detail in due course.”
Millions of older people are on track for a significant State Pension pay rise in April after Secretary of State for Work and Pensions Pat McFadden recently confirmed the proposed rates for the 2026/27 financial year.
The proposed new payment rates for the State Pension and benefits have been put before Parliament and will come into effect on April 6.
The increase will see those on the full New State Pension receive £241.30 per week, while those on the maximum Basic State Pension would receive £184.90 per week.
It’s important to remember that the amount of State Pension someone receives depends on their National Insurance contributions. To receive the full New State Pension you need around 35 years’ worth, but this may differ if you were ‘contracted out’.
The full New State Pension will increase by around £574 to £12,547 over the new financial year. However, the uprating leaves just £36 before the Personal Allowance income threshold of £12,570 is exceeded which would see more pensioners with any additional income pay tax in retirement.
New State Pension payment rates 2026/27
Full New State Pension
Weekly: £241.30 (from £230.25)Four-weekly pay period: £965.20Annual amount: £12,547
Full Basic State Pension
Weekly: £184.90 (from £176.45)Four-weekly pay period: £739.60Annual amount: £9,614
Other State Pension rates
Category B (lower) Basic State Pension – spouse or civil Partner’s insurance: £110.75 (from £105.70)Category C or D – non-contributory: £110.75 (from £105.70)
Full details on Additional State Pension, Widows Pension, increments and Invalidity Allowance can be found on GOV.UK.
State Pension and tax
Guidance on GOV.UK states: “You pay tax if your total annual income adds up to more than your Personal Allowance. Find out about your Personal Allowance and Income Tax rates.
Your total income could include:
the State Pension you get – Basic or New State PensionAdditional State Pensiona private pension (workplace or personal) – you can take some of this tax-freeearnings from employment or self-employmentany taxable benefits you getany other income, such as money from investments, property or savingsCheck if you have to pay tax on your pension
Before you can check, you will need to know:
if you have a State Pension or a private pensionhow much State Pension and private pension income you will get this tax year (April 6 to April 5)the amount of any other taxable income you’ll get this tax year (for example, from employment or state benefits)
You cannot use this tool if you get:
any foreign incomeMarriage AllowanceBlind Person’s Allowance
Use this online tool at GOV.UK to check if you have to pay tax on your pension. The full guide to tax when you get a pension can be found on GOV.UK here.
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