Low-Income Pensioners to Be Shielded From Income Tax
The chancellor will use Wednesday’s Budget to protect pensioners on low incomes from income tax through a new allowance, honouring an existing pledge not to tax people whose only income is the state pension. From April 2027 the full new state pension reaches £13,036, above the £12,570 personal allowance frozen since 2021.
This is the same story we carried this morning as reporting, and it has hardened, though not into an announcement: the Treasury has still not confirmed the mechanism’s details, and crucially it has not confirmed how many pensioners are affected, so the figure of about a million that circulated this morning remains unverified and is not repeated here. The arithmetic driving it is simple and was always going to arrive. The triple lock lifts the new state pension by the highest of inflation, earnings or 2.5%, giving 3.9% from April 2027, while the personal allowance has been frozen in cash terms for six years. The two lines were always going to cross, and they now have. The chancellor’s allies argue the point is administrative as much as financial: pensioners should not face a tax return to hand over a few pounds. Note also what Treasury sources concede — that this Budget will not involve the scale of tax and spending announcements seen from governments of either party in recent years. Two days to go.