Budget expected to protect some pensioners from income tax

Economy · First reported 26 Oct, 10:28 · Updated 22:05

Chancellor John Healey is expected to raise the tax-free allowance for low-income pensioners to match the full new state pension, due to reach £13,036 a year from April 2027. The Treasury has not confirmed the details, and reports warn that eligibility could create complications.

The full new state pension is set to rise by 3.9% to £13,036 a year from April 2027, above the standard personal allowance of £12,570.
Reports say Healey may set a higher allowance for low-income pensioners, aligned with the full new state pension, so people relying solely on it do not pay income tax on it.
The Treasury has not confirmed the proposal’s details or how many pensioners it would affect.
Commentators cited in the reports warn that eligibility rules could be complicated, particularly for pensioners with small amounts of other income or those receiving the old state pension.
The reports say pensioners with private income or higher pension income may still pay tax, while the Mirror estimates the proposal could benefit around one million state pensioners.

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Key facts

Full new state pension from April 2027: £13,036 a year; projected increase of 3.9%.
Standard personal allowance: £12,570.
Reported proposed allowance for some low-income pensioners: £13,036, aligned with the full new state pension.
Potential number of beneficiaries: Around one million, according to the Mirror’s report.