Pensions - Articles - Income tax reprieve for those reliant on State Pension

This commitment is for this Parliament only.The full new state pension is expected to breach the threshold in 2027-28.This follows a Budget announcement that government were looking at ways to reduce the administrative burden on pensioners who get landed with a tax bill.

Helen Morrissey, head of retirement analysis, Hargreaves Lansdown: “Pensioners will breathe a sigh of relief as the Chancellor confirmed pensioners whose income is solely the state pension won’t have to pay income tax on it for the remainder of this Parliament. This addresses concerns that the state pension will breach the threshold for paying tax in 2027/28.

The announcement follows news in the Budget that the government was looking at ways to relieve the admin burden on pensioners who may be landed with a tax bill for the first time. The Chancellor said they are working on a solution that means people aren’t being chased for tiny amounts of money.

It’s news that will be welcomed by pensioners who are seeing their state pension move to within a whisker of this threshold from April and were worried about what the future might hold for them. However, it is only a temporary reprieve, with the Chancellor refusing to be drawn on whether the change will remain long term. Currently, it will only last for the duration of this Parliament. We can expect to find out more about longer-term options next year.”