UK pensioners have welcomed clarity on HMRC personal allowance rules, after the government confirmed that retirees whose only income is the State Pension will not pay income tax, despite the personal allowance remaining frozen.

The reassurance comes amid ongoing concern that frozen tax thresholds could drag more pensioners into the tax system.

The personal allowance is set at £12,570 and will remain frozen until April 2030, raising fears that rising State Pension payments could push some retirees above the tax-free limit.

However, the DWP has now confirmed that pensioners receiving only the full New State Pension or the Basic State Pension will not be required to pay tax or complete a Self Assessment tax return, even where pension income exceeds the personal allowance in future years.

DWP and HMRC confirm protection for pensioners

Speaking in Parliament, Pensions Minister Torsten Bell addressed concerns raised by Conservative MP Dr Luke Evans, who warned that frozen thresholds could lead to pensioners being taxed on their State Pension alone by 2027.

He told MPs: “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, because the level of the Personal Allowance has been set above the level of the new State Pension.”

He added that the Government will ensure no pensioner is forced to complete a Self Assessment tax return solely because their State Pension rises above the allowance.

How much will State Pensions rise in April 2026?

The announcement comes ahead of a State Pension increase from April 6, with updated rates now laid before Parliament. Under the new figures for the 2026 to 2027 tax year:

Full New State Pension

Full Basic State Pension

This means the full New State Pension will remain just below the £12,570 personal allowance, ensuring no tax is due where it is the sole source of income.

When pensioners may still pay tax

While State Pension alone remains protected, tax is still payable if total income exceeds the personal allowance. HMRC counts the State Pension alongside other taxable income, including:

  • Private or workplace pensions

  • Earnings from work or self-employment

  • Savings interest or rental income

HMRC guidance is clear that it is total income, not the State Pension in isolation, that determines tax liability.

What pensioners should do now

Pensioners with additional income are advised to check their tax position carefully, particularly as frozen thresholds mean more people may cross the tax-free limit over time. HMRC provides an online tool on GOV.UK to help retirees check whether they need to pay tax on their pension income.

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For those relying solely on the State Pension, the message from Government is positive.

Despite rising pension payments and frozen allowances, no pensioner will be taxed on the State Pension alone, and no one will be pushed into unnecessary Self Assessment returns.

As cost of living pressures continue, this confirmation offers certainty and peace of mind for millions of older households across the UK.