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2h ago

HMRC Plans State Pension Tax Exemption as Campaigners Push for Wider Fix

Campaigners argue the carve-out creates unfair anomalies for old-system pensioners, leaving those with small extra income still taxed.

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Sandra Wrench says many, like her, on the old state pension could be over the threshold and paying tax (Photo: Supplied)

Overview

  • Chancellor Rachel Reeves has frozen the personal allowance at £12,570 until 2031, and the new state pension of £12,547 is set to breach that threshold from April 2027.
  • HMRC told MPs it is designing legislation to ensure people whose only income is the basic or new state pension are not taxed, with the measure targeted for April 2027.
  • The planned exemption would not cover many pre-2016 state pension recipients who receive additional state pension, nor those with modest savings interest or small occupational pensions.
  • Pensioner group Silver Voices urges a universal solution by raising the personal allowance for pensioners by £1,000 to £13,570 to avoid complex carve-outs.
  • Former DWP worker Sandra Wrench, who pays £1,633 a year on her state pension, warns some will struggle to meet tax bills, as the Treasury defends the Budget and points to the triple lock increase.