State pension to rise above tax allowance but poorest shielded

Summarised from 3 outlets · Updated 28 Oct, 13:16 · Archive

The state pension will rise to £13,036 from April, above the personal allowance, but low-income pensioners will be protected from income tax.

The state pension will rise by £489 to £13,036 annually from April next year, representing a 3.9 per cent increase in line with wage growth. This will push the state pension above the £12,570 personal tax-free allowance for the first time, creating the prospect of low-income pensioners being dragged into paying income tax.

Channellor John Healey has announced a new 'Pension Tax Allowance' to shield pensioners from this outcome. Low-income pensioners whose income consists solely of the state pension will not pay income tax, with the personal allowance for this group raised to £13,036 to match the full new state pension. The measure is expected to protect nearly one million pensioners who are dependent on the state benefit.

City AM reports the scheme is expected to cost the government around £200m a year by 2030. The threshold will rise in line with increases in the state pension over the course of this Parliament. By 2027–28, when the state pension is expected to reach £250.70 per week, the allowance would have to ignore £93.28 in tax at the basic rate. By 2029–30, when the pension is anticipated to climb to £263.35 per week (£13,694 per year), the tax ignored would rise to £224.84.

Millions of pensioners with higher incomes, including those with private pensions or who receive higher state pension amounts, will still pay income tax. The announcement comes after the Prime Minister announced plans to adjust the triple lock from April 2030. The new arrangement would maintain state pension rises at least in line with inflation or 2.5 per cent, whilst continuing to track average wages over time.

How it is being reported

• Poorest pensioners shielded from income tax – who will benefit mostThe annual new state pension will likely increase by 3.9 per cent under the 'triple lock' promise - above the £12,570 personal tax-free allowanceThe i Paper · 28 Oct, 13:03
• Budget 2026: Poorest pensioners shielded from income taxChancellor John Healey has confirmed he will shield low-income retirees from income tax as the state pension is set to rise above the personal allowance threshold next year, in a move expected to cost the government around £200m a year by 2030. Healey said the government would protect nearly one million pensioners who are dependent [...]City AM · 28 Oct, 13:00
• State pension rise confirmed in Budget but poorest households protected from paying taxThe new state pension is set to rise by £489 to £13,036 a year from next April, taking it above the tax-free personal allowance of £12,570 for the first timeThe Mirror · 28 Oct, 12:52

In this story: John Healey · Andy Burnham · UK

This summary was written by AI from the headlines and standfirsts above, and states as fact only what at least two outlets report. How we use AI · Report a problem · Corrections log