Pensioners whose only income comes from the Basic or full New state pension will not pay income tax this tax year or the next, the Department for Work and Pensions (DWP) has confirmed.
Pensions minister Torsten Bell delivered the assurance in a written parliamentary response, stating the Government is committed to ensuring older people can live with the “dignity and respect they deserve in retirement”.
Mr Bell described the state pension as the “foundation” of retirement income, adding the yearly amount of the full New state pension is set to rise by around £2,100 over the course of this Parliament.
He said: “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.”
The Chancellor announced in November the Personal Allowance will remain frozen at £12,570 until April 2031.
That freeze has prompted questions about pensioners who receive additional income, including private pensions, which may take them above the tax-free threshold.
Labour MP Euan Stainbank asked whether income tax exemptions could be extended to older people with private pensions who receive the same overall income as those on the maximum state pension alone.
Looking ahead, the Department said it plans to reduce administrative burdens for pensioners paying small amounts of tax through the Simple Assessment system from 2027/28, with further details to be set out in due course.
Basic or full New state pensioners will not pay income tax this tax year or the next
|
GETTY
Mr Bell noted that benefits which replace income, including the state pension, are generally treated as taxable.
Millions of pensioners will receive a 4.8 per cent increase in their state pension payments for the 2026/27 financial year.
The new rates take effect from April 6.
Those receiving the full New state pension will see weekly payments rise to £241.30, up from £230.25.
Mr Bell serves as a Parliamentary Under-Secretary in the DWP
|
GETTY
Pensioners on the maximum Basic state pension will receive £184.90 per week, compared with £176.45 previously.
For those paid every four weeks, the full New state pension will amount to £965.20, while the Basic state pension will total £739.60.
The Category B lower Basic state pension for spouses or civil partners and Category C or D non contributory payments will increase to £110.75 from £105.70.
Following the April uplift, the full New state pension will total around £12,547 per year, representing an increase of roughly £574 over the financial year.
The full Basic state pension will equate to £9,614 annually under the new rates.
Entitlement depends on an individual’s National Insurance record, with around 35 qualifying years typically required to receive the full New state pension, although this can vary for those who were previously contracted out of the Additional state pension.
Pensioners can check whether they need to pay tax on their pension using the online tool available on GOV.UK, which calculates liability based on state pension income alongside any other taxable earnings.