A two-week warning has been issued regarding a potential new HMRC personal tax-free allowance for state pensioners. Currently, 13 million state pensioners receive either the new or basic state pension from the Department for Work and Pensions (DWP).
Rising State Pension Rates and Tax Concerns
Due to the triple lock policy, state pension rates are increasing annually. This has raised concerns that both the new and basic state pensions are approaching the personal tax-free allowance of £12,570. As a result, an increasing number of pensioners may face paying tax on their state pension income.
Parliamentary Petition Sparks Debate
A parliamentary petition has successfully triggered a debate in the Labour Party government on this issue. The petition argues that the government has continued to apply the triple lock when uprating pensions while freezing the personal allowance at £12,570 since 2021/22.
Pensioners affected may be required to complete a self-assessment tax return. However, for those with straightforward tax affairs, HMRC may issue a bill under simple assessment.
Proposed New Tax Code
The petition urges the government to introduce a new tax code for state pensioners, set at double the basic threshold, which would be £25,140. It states: "We want the government to introduce a new tax code for state pensioners, set at double the basic threshold. If this was implemented, pensioners would receive a higher tax-exempt limit, but wealthier pensioners would still pay tax."
The petition further argues that people with small private or workplace pensions are currently being taxed unfairly.
Debate Scheduled for June 15, 2026
Parliament will debate this petition on June 15, 2026. The public can watch online via the UK Parliament YouTube channel.
In the 2025 Budget, the government announced that the personal allowance would remain frozen at its current level until April 2031. It also stated that from 2027/28, pensioners whose sole income is the basic or new state pension would not have to pay small amounts of tax via simple assessment if the pension exceeds the personal allowance from that point.
