Rachel Reeves is facing growing pressure over pensioner tax thresholds after a campaign calling for a separate tax code for retirees reached more than 54,000 signatures.
The petition has now passed the halfway point towards the 100,000 signatures required to trigger a parliamentary debate.
Campaigners are urging the Government to prevent pensioners from being pulled into paying income tax as a result of state pension increases.
The issue centres on the frozen personal allowance, which currently stands at £12,570.
Under existing rules, pensioners begin paying income tax once their total income exceeds that threshold. The state pension is set to rise in the coming years under the triple lock mechanism, raising concerns that more retirees will be drawn into the tax system despite having modest incomes.
The Treasury has already issued an official response to the petition. If the campaign reaches 100,000 signatures, ministers would be required to defend their position in Parliament.
The petition was launched by Timothy Hugh Mason. It calls for the introduction of a new tax code specifically for state pensioners.
Under the proposal, the tax free threshold for pensioners would be set at double the current personal allowance, raising it to £25,140.
Petition calling for a separate tax code for retirees passes 54,000 signatures
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Supporters argue this would protect pensioners with small private or workplace pensions from paying income tax, while still requiring higher-income pensioners to contribute.
Mr Mason said: “We want the Government to introduce a new tax code for state pensioners, set at double the basic threshold.”
He added, “If this were implemented, pensioners would receive a higher tax-exempt limit, but wealthier pensioners would still pay tax.” He said people with small private or workplace pensions were being taxed unfairly.
The Treasury has rejected calls to double the personal allowance for pensioners. In its response to the petition, the department described the proposal as “untargeted and costly”.
A spokesman said, “The state pension is the foundation of support for pensioners.” He added, “The Government is committed to a fair tax system but doubling the personal allowance for pensioners would be untargeted and costly.”
Officials also said the UK already has the highest personal allowance among G7 countries and warned that doubling it for all pensioners would benefit higher-income retirees the most.
Despite rejecting the proposal, the Treasury has acknowledged an emerging problem
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GETTYDespite rejecting the proposal, the Treasury has acknowledged an emerging problem.
Officials confirmed that plans would be set out this year to address the issue once the state pension exceeds the personal allowance, which is expected to occur from the 2027 to 28 tax year.
The Treasury said the aim would be to reduce the administrative burden on pensioners, particularly those whose only income is the basic or new state pension.
Personal finance expert Martin Lewis has repeatedly raised concerns about the issue.
He has highlighted that the full new state pension currently stands at £12,558, while the personal allowance is frozen at £12,570 until 2031.
From April 2026, the full new state pension is expected to sit just £30 below the tax free threshold, meaning pensioners with any additional income could face a tax bill.
The impact is expected to intensify from 2027. Projections suggest the state pension could rise to around £12,861 that year, placing it roughly £300 above the personal allowance. By 2030, triple lock increases could raise the state pension to around £13,850.
Mr Lewis has questioned how the system will operate in practice.
He raised the issue directly with the Chancellor following the Budget
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ITV/GETTY“How are we going to have 90 year olds doing self-assessment forms when they are only earning £50 over the limit?”
He raised the issue directly with the Chancellor following the Budget, relaying a viewer’s concern about an elderly parent with dementia and whether someone with only a state pension would be required to complete a tax return.
Rachel Reeves responded by offering reassurance. She said: “So if you just have a state pension and you do not have any other pension you do not have to fill in a tax return.” Ms Reeves added: “I make that commitment for this Parliament.”
The Chancellor acknowledged that 2027 was likely to be the crossover point and said officials were working on a solution. Ms Reeves added: “We are working on a solution as we speak to ensure we are not going after tiny amounts of money.”