DWP confirms start date for tax on State Pension payments

The Personal Allowance will remain frozen at £12,570 until April 2031.

08:51, 02 Mar 2026Updated 14:22, 02 Mar 2026

State Pensioners to face major tax change

The Department for Work and Pensions (DWP) has confirmed that pensioners whose sole income is the Basic and full New State Pension, “without any increments, will not pay any income tax this tax year or next”. Pensions Minister Torsten Bell also said the UK Government is committed to making sure older people can live with the “dignity and respect they deserve in retirement”.

His comments came in a written response to Labour MP Euan Stainbank who asked whether Chancellor Rachel Reeves plans to extend the income tax exemption to older people with private pensions “who receive the same income as those who solely receive the maximum State Pension”.

The Chancellor announced in November that the Personal Allowance will remain frozen at £12,570 until April 2031.

READ MORE: People on New or Basic State Pension can change monthly payments to weeklyREAD MORE: Older women urged to check for State Pension back payments worth over £8,000

Mr Bell said the State Pension is the “foundation” of the support available to people in retirement adding that over the course of this Parliament, the yearly amount of the full New State Pension is on track to go up by around £2,100.

He continued: “When it comes to taxes, social security benefits are treated differently depending on why they are paid. Generally, benefits that replace income, like the State Pension, are taxable.

“However, I can confirm that those whose sole income is the basic and full new State Pension, without any increments, will not pay any income tax this tax year or next. Furthermore, 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.”

The DWP explained the UK Government 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. More details on this will be announced “in due course”.

Millions of older people are on track for a significant State Pension pay rise next month when the New and Basic State Pension increases by 4.8 per cent for the 2026/27 financial year. The new payment rates 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.

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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