Treasury Dismisses Petition for Doubled Pensioner Tax Allowance
The HM Treasury has issued a formal response to growing calls for a significant increase in the tax-free allowance for state pensioners, firmly rejecting proposals that would see the threshold rise to £25,140. This development follows a parliamentary petition that has garnered substantial public support, highlighting ongoing debates about fairness in pensioner taxation.
Petition Demands Fundamental Tax Reform for Retirees
A parliamentary petition calling for the introduction of a new tax code specifically for state pensioners has now surpassed 55,000 signatures, demonstrating considerable public backing for reform. The petition advocates for establishing a tax allowance set at double the current basic threshold, which would effectively create a £25,140 tax-exempt limit for qualifying pensioners.
The petition organisers argue that "people with small private or workplace pensions are currently being taxed unfairly" under the existing system. They propose that while wealthier pensioners would continue to pay tax under their suggested framework, those with more modest additional pension income would benefit from enhanced protection against taxation. The petition requires 100,000 signatures to be considered for parliamentary debate, representing a significant milestone in pension policy discussions.
Government Response Highlights Cost and Targeting Concerns
In its detailed response issued on December 9, the Treasury acknowledged the petition but expressed serious reservations about implementing such sweeping changes. Officials emphasised that "doubling this allowance for all pensioners would be costly and untargeted", arguing that it would disproportionately benefit higher-income pensioners rather than those most in need of financial support.
The Treasury pointed out that the UK already maintains "the highest Personal Allowance amongst G7 countries", suggesting the current system provides substantial protection compared to international counterparts. Instead of broad allowance increases, the government has committed to administrative reforms that will ease burdens for certain pensioners from 2027-28.
Triple Lock Commitment and Future Pension Policy
Despite rejecting the petition's central proposal, the Treasury reaffirmed its commitment to maintaining the State Pension Triple Lock throughout the current Parliament. This mechanism, described as "one of the most generous State Pension uprating mechanisms in the world", will increase both basic and new State Pensions by 4.8% next April.
This increase represents a substantial boost to pensioner incomes, with officials estimating it will strengthen retirement security by providing up to £575 in additional annual income for eligible recipients. The Treasury emphasised that "the State Pension remains the foundation of support available to pensioners", suggesting this core provision takes precedence over more complex tax allowance reforms.
Looking forward, the government has indicated it will explore the best methods to implement administrative easing for pensioners whose sole income comes from state pensions, with more details expected to emerge next year. This approach suggests a preference for targeted administrative improvements rather than sweeping structural changes to the tax system affecting all pensioners.
