Data from The Telegraph found that around 249,000 retirees were already paying at least £1,000 of tax on their state pension income before April 6.
This will have increased this week, pushing an estimated 650,000 more pensioners across the tax threshold in 2025-26, although the full amount will not be clear until the end of this tax year – that’s April 5 2026.
Some pensioners – in particular widows and widowers, particularly those of armed forces personnel – receive additional state pension, and this may tip them into having to pay income tax on their relatively modest pensions.
The system for widows and widowers receiving part of their late partners’ state pension is explained here.
The freeze in personal allowance, known as fiscal drag, is the subject of a petition to Parliament was started by Alan David Frost, and has now had almost 250,000 signatures.
The petition says: “Raise the income tax personal allowance from £12570 to £20000. We think this would help low earners to get off benefits and allow pensioners a decent income.
“We think it is abhorrent to tax pensioners on their State Pension when it is over the personal allowance. We also think raising the personal allowance would lift many low earners out of benefits and inject more cash into the economy creating growth.”
Signatures can still be added here.
Why do pensioners pay tax on their State Pension?
Once a petition reaches 10,000 signatures, the Government responds, and if 100,000 people sign, a date for the issue to be debated by MPs may be scheduled.
This will now happen on May 12 2025.
When Parliament debates this petition on 12 May 2025, members of the public will be able to watch online on the UK Parliament YouTube channel.
The Government has issued a written response
There has been an update on the Parliament petitions website and this says “The Government has no plans to increase the Personal Allowance to £20,000. Increasing the Personal Allowance to £20,000 would come at a significant fiscal cost of many billions of pounds per annum.
“This would reduce tax receipts substantially, decreasing funds available for the UK’s hospitals, schools, and other essential public services that we all rely on. It would also undermine the work the Chancellor has done to restore fiscal responsibility and economic stability, which are critical to getting our economy growing and keeping taxes, inflation, and mortgages as low as possible.
“The Government keeps all taxes under review as part of the policy making process. The Chancellor will announce any changes to the tax system at fiscal events in the usual way.”
Has the Personal Allowance petition already been mentioned in Parliament?
Yes, briefly. Last week, Tanmanjeet Singh Dhesi, the Labour Party MP for Slough, asked Chancellor Rachel Reeves, “if she will make an estimate of the impact of changing the tax free personal allowance to £20,000 on tax receipts.”
The Exchequer Secretary to the Treasury, Labour MP James Murray, responded: “The Government is committed to keeping taxes for working people as low as possible while ensuring fiscal responsibility and so, at our first Budget, we decided not to extend the freeze on personal tax thresholds.”
What is the Personal Tax Allowance?
The standard Personal Allowance is £12,570, which is the amount of income you do not have to pay tax on.
Some people are entitled to a larger Personal Allowance – this is the full list, and how to apply.
It decreases if your income is over £100,000. For every £2 you earn over £100,000, you lose £1 of your tax-free Personal Allowance.
This amount has been frozen since 2021.
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The government froze the threshold until April 2028, rather than allowing it to rise with inflation and wage growth, meaning more people will go onto higher tax brackets.
If you’re married or in a civil partnership, you may be able to claim Marriage Allowance to reduce your partner’s tax if your income is less than the standard Personal Allowance.
If you do not claim Marriage Allowance and you or your partner were born before 6 April 1935, you may be able to claim Married Couple’s Allowance.
