The Personal Allowance will remain frozen at £12,570 until the 2028/9 financial year.
More than 4,300 people have signed a new online petition calling for State Pension payments to be disregarded as income for the personal tax allowance, which has been frozen at £12,570 since the 2021/22 financial year and will remain at that level until April 6, 2028.
Petition creator David Bresnahan argues that it is “wrong to tax the State Pension”. The ‘make the State Pension tax exempt’ petition has been posted on the petitions-parliament website and states: “We want the [UK] Government to make the State Pension tax exempt and not impact the tax threshold. We think it is wrong to tax the State Pension.”
At 10,000 signatures of support, it will be entitled to a written response from the UK Government, at 100,000, the Petitions Committee would consider it for debate in Parliament. However, a petition calling for the Personal Allowance to be increased to £20,000 – which has gathered over 252,000 signatures – was debated by MPs on May 19, with the UK Government confirming there are no plans to change the £12,570 threshold.
READ MORE: New call to scrap National Insurance deductions for people over 60READ MORE: Winter Fuel Payments of up to £300 set to return for ‘more pensioners’ – what we know so far
The New and Basic State Pensions increased by 4.1 per cent last month while additional elements went up by 1.7 per cent.
Under the Triple Lock, the New and Basic State Pensions increase each year in-line with whichever is the highest between the average annual earnings growth from May to July (4.1%), CPI in the year to September (1.7%), or 2.5 per cent.
The Labour Government has pledged to honour the Triple Lock for the next five years. The full New State Pension is now worth £11,973 over the 2025/26 financial year, leaving just £597 before it exceeds the Personal Allowance threshold.
The key thing to remember is that someone on the full New State Pension will not pay income tax, but older people with additional income through employment, private or workplace pensions, might need to pay tax.
For most people, this would be paid automatically through PAYE on employment and tax on private pensions. Anyone who doesn’t pay tax automatically pays tax through deductions, would receive a tax bill from HMRC the following summer to be paid by January in the next year.
There has been a fair bit of speculation on the number of pensioners who will pay tax, but currently of the 13 million State Pensioners across the UK, some 8.m (62%) already pay some tax in retirement, so this isn’t something new.
And with auto-enrolment in the workplace – now in its 13th year – more people will benefit from increased income in retirement and will probably pay tax – which will typically be deducted from their private pension.
It’s important to understand any tax to be paid in retirement is based on the amount of income earned above the threshold – not the total additional income. For example, if someone has a total annual income of £13,000, they will pay tax on £430 – which is the amount above the £12,570 threshold.
Those affected would then have to pay HMRC 19 per cent of their income above the threshold, which is the starter rate of tax in Scotland (20% in England).
Income rates and bands – Scotland
- £12,571 to £14,876 – 19%, Starter rate
- £14,877 to £26,561 – 20%, Scottish basic rate
- £26,562 to £43,662 – 21%, Intermediate rate
- £43,663 to £75,000 – 42%, Higher rate
Income rates and bands – England
- £12,571 to £50,270 – 20%
- £50,271 to £125,140 – 40%
- over £125,140 – 45%
State Pension payments 2025/26
The DWP has publish the full list of State Pension and benefit uprated payments on GOV.UK here.
Full New State Pension
- Weekly payment: £230.25
- Four-weekly payment: £921
- Annual amount: £11,973
Full Basic State Pension
- Weekly payment: £176.45
- Four-weekly payment: £705.80
- Annual amount: £9,175
To check your own future State Pension payments, use the online forecasting tool on GOV.UK here.
