More than 104,000 people have signed an online petition calling for State Pensions to be exempt from income tax.
Income tax rises for Scots in April – how the changes affect you
An online petition urging Chancellor Rachel Reeves to use the Spring Statement to increase the Personal Allowance tax threshold for State Pensions will be hand-delivered to Downing Street ahead of the Spring Statement on March 26. More than 104,000 people have signed the petition created by Dennis Reed and posted on Change.org.
Last year, the longtime campaigner for older people’s rights successfully lobbied the then-Conservative government to retain the Triple Lock for State Pensions in its final Budget and built on his success by ensuring all major political parties also committed to the Triple Lock policy in their 2024 manifestos.
Under the Triple Lock policy, 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, inflation in the year to September, or 2.5 per cent.
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However, despite this safeguard, Dennis is still concerned about the state of pensioners’ incomes; and says a failure to increase the tax threshold – which will be frozen at £12,570 until the 2027/28 financial year – would be a “double whammy” after the Government’s decision to means-test the Winter Fuel Payment.
Explaining the problem with the current threshold, Dennis said: “Because of the frozen tax Personal Allowances, the top of the New State Pension may breach the current Personal Allowance of £12,570 in 2026.
“This would lead to the ludicrous situation of the State Pension safety net, which has already been paid for through National Insurance and tax, being taxed again.
“Many more pensioners across the country would be plunged into poverty as a result of political choice.”
Ahead of the Spring Statement next week, Mr Reed has urged the UK Government to take what he calls an ‘easy win’.
He said: “It’s a shame the Government doesn’t seem to be in listening mode, because increasing the tax threshold for State Pensioners could be such an easy win for them.
“There are an awful lot of pensioners who are struggling following cuts to the Winter Fuel Payment and this move would go a long way to restoring some goodwill, especially ahead of the local elections in May.”
The campaigner added: “Ultimately, if they are not going to increase the tax threshold in this Spring Statement then the problem doesn’t go away, they’re just kicking the can down the road, and it will get worse as more pensioners are sucked into the tax system. This is a problem they’re going to have to confront at some point.”
Mr Reed will deliver the petition to Downing Street at 2.30pm on Tuesday March 25. You can read the full petition on Change.org here.
State Pension uprating 2025/26
The annual Department for Work and Pensions (DWP) uprating next month will see the New and Basic State Pensions rise by 4.1 per cent, however, future forecasts from the Labour Government expect it to rise by 2.5 per cent over the next four financial years.
Using these forecasts, it means the full New State Pension is on track to be worth £12,578.80 in the 2027/28 financial year – £78.80 over the Personal Allowance.
While the amount of State Pension to be taxed may seem relatively small, older people with other income streams could find themselves having to part with more cash to pay a tax bill – if it’s not automatically deducted from private or workplace pensions through PAYE.
The Labour Government has pledged to honour the Triple Lock or the duration of its term and the latest predictions show the following projected annual increases:
- 2025/26 – 4.1%, the forecast was 4%
- 2026/27 – 2.5%
- 2027/28 – 2.5%
- 2028/29 – 2.5%
- 2029/30 – 2.5%
It’s important to remember someone whose sole income is from the full New State Pension this year will not pay income tax, but older people with additional income through employment, private or workplace pensions, might need to pay tax.
State Pension payments 2025/26
The DWP has published the full list of State Pension and benefit uprated payments on GOV.UK here, which also includes additional elements such as the deferred rates, which are rising by 1.7 per cent (September Consumer Price Index inflation rate).
Full New State Pension
- Weekly payment: £230.25 (from £221.20)
- Four-weekly payment: £921 (from £884.80)
- Annual amount: £11,973 (from £11,502)
Full Basic State Pension
- Weekly payment: £176.45 (from £169.50)
- Four-weekly payment: £705.80 (from £678)
- Annual amount: £9,175 (from £8,814)
Future new State Pension forecasts
Under a 2.5 per cent increase, the full New State Pension will be worth:
- 2026/27 – £236 per week, £12,227.30 a year
- 2027/28 – £241.90 per week, £12,578.80 a year
