Rachel Reeves, in a conversation with Martin Lewis, has affirmed that individuals whose sole income is the state pension will not be required to pay taxes. The Chancellor, in the recent Budget announcement, confirmed a 4.8% increase in the state pension, raising the full new state pension from £230.25 per week to £241.30 per week (£12,547.60 annually) starting April 2026.
This increment places the state pension just below the £12,570 personal allowance threshold, which signifies the amount one can earn in a tax year before becoming liable for taxation. Concerns were raised by analysts that millions of pensioners solely reliant on the state pension might face tax obligations when the pension rises again in April 2027.
The state pension experiences an annual rise in line with the triple lock mechanism. Notably, the Chancellor specified that individuals solely receiving the basic or new state pension will be exempt from paying small tax amounts through Simple Assessment.
Despite the new full state pension closely approaching the taxable threshold, Rachel Reeves assured in an interview with Martin Lewis that those with the state pension as their only income will remain tax-free for the current Parliament term. However, beyond that, no commitments have been made regarding tax obligations. Martin Lewis emphasized that from 2027, tax will be due on the full new state pension as it exceeds the tax-free allowance.
Moreover, the Chancellor’s announcement in the Budget reiterated that individuals solely receiving the basic or new state pension will be exempt from paying minimal taxes through Simple Assessment, with further details on the process yet to be disclosed. The triple lock mechanism ensures the state pension increase every April based on the highest of earnings growth between May to July, inflation in September, or a minimum of 2.5%. The 4.8% wage growth observed from May to July dictated the state pension increment for April 2026.