The Department for Work and Pensions (DWP) has issued a significant update for recipients of the New or Basic State Pension, providing crucial reassurances regarding their tax obligations for the upcoming financial year.
Tax Reassurance for Pensioners
In a statement that will bring relief to millions, the DWP has confirmed that individuals whose sole income consists of the Basic State Pension or New State Pension will not be required to pay any income tax during the 2026/27 tax year. This assurance comes despite concerns that the frozen Personal Allowance threshold might otherwise push pensioners into tax liability.
Parliamentary Exchange
The clarification emerged during DWP questions in Parliament, where Conservative MP Dr Luke Evans raised pressing concerns about pensioner taxation. Dr Evans highlighted how the Chancellor's decision to freeze tax thresholds in the Budget had created uncertainty, potentially bringing state pensioners into the tax net for the first time.
"This was raised with the Chancellor, who said that she did not want that to happen and that she would create a workaround," Dr Evans stated. "However, only two weeks ago we voted on the Finance Bill, which the Labour party pushed through, and as it stands that means that pensioners will pay tax on their state pension."
Minister's Response
Pensions Minister Torsten Bell provided the definitive response that has since been circulated as official DWP guidance. "It has been confirmed that those whose income is only the basic level of the Basic State Pension or the New State Pension will not be required to pay tax next year," Mr Bell told Parliament.
The Minister explained that this exemption applies because the Personal Allowance has been set above the level of the new state pension, currently standing at £12,570 and remaining unchanged until April 2030 according to government policy.
Future Administrative Relief
Beyond the immediate tax exemption, the government has committed to simplifying administrative processes for pensioners in future years. Mr Bell elaborated on the Chancellor's Budget statement, noting: "What the Chancellor said at the Budget was that in future years we will make sure that no pensioner will be required to fill in a Self-Assessment form, or indeed a simple Self-Assessment form, for any tax that is due because the new state pension level is above that of the personal allowance."
Pension Amounts for 2026/27
From April 6, 2026, the complete New State Pension will increase to £241.30 weekly, while those entitled to the maximum Basic State Pension will receive £184.90 per week. The full New State Pension is set to rise by approximately £574 to £12,547 in the upcoming financial year, still comfortably below the Personal Allowance threshold.
This combination of increased pension payments and maintained tax-free allowances represents a significant financial safeguard for pensioners across the United Kingdom, ensuring that those relying solely on state pensions can maintain their standard of living without unexpected tax burdens.
