A significant public campaign is urging the government to grant state pensioners a substantial tax break by doubling their personal income tax allowance. A petition on the official Parliamentary website is calling on the Labour administration and HMRC to increase the allowance for pensioners from the current £12,570 to £25,140.
Petition Details and Parliamentary Threshold
The petition advocates for the creation of a new tax code specifically for those receiving the state pension. It argues that the move would establish a higher tax-exempt limit for pensioners, while ensuring wealthier retirees with larger private incomes continue to pay tax. The organisers state: "We think that people with small private or workplace pensions are currently being taxed unfairly."
Having already gathered 10,000 signatures, the petition will be considered for a debate in the House of Commons if it reaches the crucial threshold of 100,000 signatures. This would force MPs to formally discuss the proposed policy change.
The Frozen Thresholds and the Looming Tax Bill
The campaign's urgency stems from the current government policy on tax thresholds. Chancellor Rachel Reeves confirmed in the recent Autumn Statement that the personal allowance and other income tax bands will remain frozen at their present levels.
This freeze creates a specific problem for pensioners as the state pension increases. From next April, the new state pension is set to rise to £241.30 per week, equating to an annual income of £12,547. This figure is just £23 below the current personal allowance.
Analysis shows that if the state pension rises by a modest 2.5%, from April 2027 it will exceed the frozen personal allowance. This would mean a pensioner receiving the full new state pension would have to pay income tax on around £292 of their income, resulting in an estimated tax bill of £58.
Government's Current Stance and Future Commitments
The Autumn Budget did include a measure aimed at simplifying life for some pensioners. It promised to "ease the administrative burden for pensioners whose sole income is the basic or new state pension". This would apply only to those without additional pension income, such as the second state pension.
Under this plan, from 2027-28, they would not have to "pay small amounts of tax via simple assessment" if their state pension exceeds the personal allowance. When questioned directly on whether these pensioners would ultimately have to pay the tax, Chancellor Rachel Reeves stated: "In this parliament, they won’t have to pay the tax."
The petition, however, seeks a more permanent and wide-ranging solution through a doubled allowance, arguing it is a matter of fairness for retirees relying on modest incomes.
