The Chancellor has set out new tax details affecting older households
Rachel Reeves had come under pressure on the issue.(Image: Getty Images)
Rachel Reeves has confirmed rules around low-income state pensioners and tax payments.
Retirees with the pension as their sole incomes were facing the prospect of having to pay income tax from 2027.
This is because of frozen tax bands.
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The full state pension has been creeping ever closer to the personal allowance limit of £12,570.
This is the point at which someone starts paying income tax.
This situation has increased pressure on the Government, particularly after Rachel Reeves announced the extension of frozen bands at the Budget.
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The Chancellor has now confirmed that people whose sole income is the state pension will not have to pay income tax.
She will hope this will quieten concerns over poorer pensioners and tax.
In an interview with the money campaigner Martin Lewis, Ms Reeves confirmed that “in this Parliament, they won’t have to pay the tax”.
The extension of frozen tax bands means millions more households will have to pay more tax as their earnings increase.
This is known as fiscal drag, as more people are pulled into higher tax bands.
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