State pensioners with no other income won’t pay tax, minister confirms

Retirees solely dependent on the state pension will be exempt from paying income tax, a minister has confirmed. Pensions minister Torsten Bell said that state pensioners with no other income “will not have the administrative burden of paying small amounts of tax in this Parliament”. Chancellor John Healey will set out the details in next month’s Budget. Shorts The i Paper revealed in July that Andy Burnham’s Government was set to press ahead with plans set out by the last chancellor, Rachel Reeves, to exempt retirees who are wholly reliant on the state pension from tax. Earnings figures published on Tuesday revealed that the state pension is set to climb to more than £13,000 a year, putting it above the income tax personal allowance of £12,570 for the first time. Figures from the Office for National Statistics put average wage growth at 3.9 per cent, meaning that the state pension is likely to go up by this amount in April. This would equate to an increase of £488 a year, from the current level of £12,547.60 to £13,036.40. Under the triple lock, the state pension rises each April in line with the highest of average annual wage growth from May to July of the previous year, the rate of inflation in September of the previous year, or 2.5 per cent. Because the wage growth figure is almost certain to be higher than September’s inflation figure, it means that this will be used to increase the state pension in the spring. The ratcheting up of pensions thanks to the triple lock has created a conundrum for the Government, because for the first time this April the state pension will be above the personal allowance, and therefore liable to income tax. Those with both private and state pensions will pay more tax. On Tuesday, Bell reconfirmed Reeves’ pledge and said that details on how the commitment will be delivered will be revealed in the Budget on 28 October. Martin Lewis, the founder of Money Saving Expert, posted on X that he had received a statement from Bell, stating: “In line with the commitment made at Budget 2025, pensioners who only just exceed the personal allowance will not have the administrative burden of paying small amounts of tax in this Parliament. “The Chancellor will set out further details on how that commitment will be delivered at the Budget.” The Prime Minister’s Official spokesman said on Tuesday that “work is already underway to ensure anyone whose only income is the full new or basic state pension, without any increments, will not pay income tax in this Parliament”. He added that the Government would “set out further details in due course”.