The Personal Allowance will remain frozen at £12,570 until April 2031.State Pensioners to face major tax change

The Department for Work and Pensions (DWP) has confirmed that pensioners whose sole income is the Basic and full New State Pension “without any increments, will not pay any income tax this tax year or next”. Pensions Minister Torsten Bell also said the UK Government is committed to making sure older people can live with the “dignity and respect they deserve in retirement”.

His comments came in a written response to Labour MP Euan Stainbank who asked whether the Labour Government plans to extend the income tax exemption to older people with private pensions “who receive the same income as those who solely receive the maximum State Pension”.

Chancellor Rachel reeves announced in November that the Personal Allowance will remain frozen at £12,570 until April 2031.

READ MORE: Nearly half a million State Pensioners missing out on higher payments this yearREAD MORE: New and Basic weekly State Pension payment rates in 2026

Mr Bell said the State Pension is the “foundation” of the support available to people in retirement adding that over the course of this Parliament, the yearly amount of the full New State Pension is on track to go up by around £2,100.

He continued: “When it comes to taxes, social security benefits are treated differently depending on why they are paid. Generally, benefits that replace income, like the State Pension, are taxable.

“However, I can confirm that those whose sole income is the basic and full new State Pension, without any increments, will not pay any income tax this tax year or next. Furthermore, the Chancellor has said that those whose only income is the Basic or New State Pension without any increments will not have to pay income tax over this Parliament.”

The DWP explained the UK Government will achieve this by “easing the administrative burden” for pensioners so that they do not have to pay small amounts of tax via Simple Assessment from 2027/28. More details on this will be announced “in due course”.

The full New State Pension is now worth £241.30 per week, while those on the maximum Basic State Pension will receive £184.90 every week.

It’s important to remember that the amount of State Pension someone receives depends on their National Insurance contributions. To receive the full New State Pension you need around 35 years’ worth, but this may differ if you were ‘contracted out’.

The full New State Pension will increase by around £574 to £12,547 over the 2026/27 financial year.

A State Pension age couple check their finances

The Personal Allowance will remain frozen at £12,570 until April 2031.(Image: Getty)

New State Pension payment rates 2026/27

Full New State Pension

  • Weekly: £241.30 (from £230.25)
  • Four-weekly pay period: £965.20
  • Annual amount: £12,547

Full Basic State Pension

  • Weekly: £184.90 (from £176.45)
  • Four-weekly pay period: £739.60
  • Annual amount: £9,614

Other State Pension rates

  • Category B (lower) Basic State Pension – spouse or civil Partner’s insurance: £110.75 (from £105.70)
  • Category C or D – non-contributory: £110.75 (from £105.70)

Full details on Additional State Pension, Widows Pension, increments and Invalidity Allowance can be found on GOV.UK.

State Pension and tax

Guidance on GOV.UK states: “You pay tax if your total annual income adds up to more than your Personal Allowance. Find out about your Personal Allowance and Income Tax rates.

Your total income could include:

  • the State Pension you get – Basic or New State Pension
  • Additional State Pension
  • a private pension (workplace or personal) – you can take some of this tax-free
  • earnings from employment or self-employment
  • any taxable benefits you get
  • any other income, such as money from investments, property or savings

Check if you have to pay tax on your pension

Before you can check, you will need to know:

  • if you have a State Pension or a private pension
  • how much State Pension and private pension income you will get this tax year (April 6 to April 5)
  • the amount of any other taxable income you’ll get this tax year (for example, from employment or state benefits)

You cannot use this tool if you get:

  • any foreign income
  • Marriage Allowance
  • Blind Person’s Allowance

Use this online tool at GOV.UK to check if you have to pay tax on your pension. The full guide to tax when you get a pension can be found on GOV.UK here.

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