Pensioners: Tax Allowances
The question
To ask the Chancellor of the Exchequer, whether she plans to extend the exemption to pay income tax to pensioners with private pensions who receive the same income as those who solely receive the maximum state pension.
Answered by Torsten Bell
The Government is committed to making sure older people can live with the dignity and respect they deserve in retirement. The State Pension is the foundation of the support available to them. Over the course of this Parliament, the yearly amount of the full new State Pension is currently projected to go up by around £2,100. This reflects the Government’s commitment to the Triple Lock for the duration of this Parliament. This will increase the basic and new State Pension by 4.8% next April, boosting pensioner incomes by up to £575 a year and strengthening retirement security.
When it comes to taxes, social security benefits are treated differently depending on why they are paid. Generally, benefits that replace income, like the State Pension, are taxable. However, 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.
Furthermore, the Chancellor has said that those whose only income is the basic or new State Pension without any increments will not have to pay income tax over this Parliament. At the Budget, the Government announced that it will achieve this by easing the administrative burden for pensioners so that they do not have to pay small amounts of tax via Simple Assessment from 2027/28. The Government will set out more details in due course.
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