The Labour Party has published its Spring Statement documents
Labour issues major announcement over HMRC tax bills for state pension
The Labour Party government has issued a major update over state pensioner tax bills. The Labour Party has published its Spring Statement documents, with retirees informed over the government and HMRC’s stance on tax bills for retirees.
The majority of taxpayers and the majority of pensioners have no taxable savings, dividend or property income and will pay no more tax as a result of these changes, the Labour Party says.
The Budget documents detail: “In particular, over 90% of taxpayers do not pay savings tax. In 2029-30, around two thirds of the revenue from the increases to the property, dividend, and savings tax rates is expected to come from the top 20% of households.”
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The Spring Statement goes on to say: “Those with small amounts of income from assets will continue to be protected by tax-free allowances, and all taxpayers will continue to benefit from the protection offered by Individual Savings Accounts (ISAs).
“Interest and dividends received on assets held within ISAs will continue to be entirely tax-free. The changes to property income rates will apply in England, Wales and Northern Ireland.
“The government will engage with the devolved governments of Scotland and Wales to provide them with the ability to set property income rates in line with their current income tax powers in their fiscal frameworks.
“The changes to dividend and savings income rates will apply UK-wide as these rates are reserved.”
The warning is pertinent given from April 2027, the full new state pension will use up all the personal allowance threshold and cross the line into attracting a tax bill.
You can earn up to £12,570 a year without paying income tax thanks to the allowance, but the full new state pension now pays £230.25 a week, or £11,973 a year.
Payment rates will go up 4.8 percent from April 2026, lifting the amount to £241.30 a week, or 12,547.60 a year, just over £20 away from using up all the personal allowance.
It means the full new state pension will definitely cross the threshold into attracting an income tax bill from April 2027.