Andy Burnham warned new pensioner tax plan will be 'messy'

Andy Burnham warned new pensioner tax plan will be 'messy' There are fears pensioners are going to be dragged into paying income tax due to the frozen personal allowance Share Article Share Article Facebook X LinkedIn Reddit Bluesky Email Copy Link Link copied Add us as preferred source Comments By Katie Harris , Senior Political Correspondent 15:30, Mon, Oct 26, 2026 Updated: 15:50, Mon, Oct 26, 2026 Prime Minister Andy Burnham (Image: Getty) Andy Burnham was warned that increasing the personal allowance for only the poorest pensioners is set to be "messy". The full new state pension will rise by £489 to £13,036 next April under the triple lock policy. However, the hike will push it above the frozen £12,570 personal allowance. Chancellor John Healey is expected to announce an increase in the tax-free amount for pensioners with no other income to £13,036 in his statement on Wednesday. Article continues below ADVERTISEMENT But campaigners and experts warned it risks creating a "cliff-edge" where some older people surviving on modest incomes would end up worse off. Get personal finance news, money saving tips and advice plus selcted offers and competitions I would like to receive emails from the Daily Express featuring our latest products, services, offers, and promotions from across the Reach Plc family . Subscribe Invalid email You agree you are 18 or over. We use your sign-up to provide content in ways you've consented to and to improve our understanding of you. This may include adverts from us and third parties based on our knowledge of you. You can unsubscribe at any time. More Info . Some pensioners given huge income tax boost in Budget Former pensions minister Sir Steve Webb, partner at consultants LCP, said: “This scheme is being developed because the repeated freezing of the personal allowance has dragged more and more pensioners into the tax net. But the proposed solution looks messy and increasingly expensive. "The gap between the new state pension and the tax threshold is set to grow every year, which will make the policy hard to switch off. But if it continues, the cost will grow and grow. Article continues below ADVERTISEMENT "And if the extra allowance is available only to those on a low income, there could be a growing ‘cliff edge’ problem where those with very small amounts of private income lose the whole allowance and end up worse off than those with nothing." Article continues below ADVERTISEMENT Silver Voices director Dennis Reed said the plan would "create many more anomalies than it resolves". He said: "The proposal is likely to lead to pensioners on broadly the same income being treated differently for tax purposes and only a tiny minority benefitting. What a way to run a whelk stall. "Even more concerning is that this move on pensioner personal allowances would seem to indicate that the Government is going to do nothing to lift the scandalous freeze on tax thresholds in this week's Budget." Ex-pensions minister Baroness Altmann warned the move could create a two-tier class of pensioners. She said: "Reports suggest that the Chancellor will announce in this week's Budget that poorer pensioners will not be dragged into the tax net if they only receive a state pension. "But how will this actually work? Will this only apply to younger pensioners who receive the new state pension which will be just over £13,000 next year? "Or will it apply to the over-75s on the old system too? And what about younger workers on incomes slightly above the frozen tax threshold? Will they be exempt too? "Unless he raises the personal tax allowance for everyone on low incomes, or for all taxpayers, he will create inequity." She added: "Trying to get millions of pensioners to fill in tax returns to pay tiny amounts of tax they never knew are owed, will be horrendous in terms of communication and calls to Inland Revenue hotlines from old people who have only ever been on PAYE receiving penalties for not completing a tax return for the money they will suddenly owe." Under the plans, reported by The Times, the personal allowance will rise in line with increases in the state pension over the course of this Parliament, costing taxpayers £200 million a year by 2030. Ministers have repeatedly promised they would prevent people whose only income is the state pension from being hit with income tax. The personal allowance has been frozen at £12,570 since 2021 and is due to remain at that level until 2031 in a major stealth tax. However, the state pension will exceed the tax-free amount from next April due to the triple lock , which sees payments rise by whichever is highest out of average earnings, inflation and 2.5%. Tory Shadow Chancellor Andrew Griffith said: “The Conservatives warned months ago that John Healey needed to give pensioners certainty that they wouldn’t have to spend the last years of their lives filing tax returns or on the phone to HMRC . They have finally listened to the Conservatives’ warnings. “John Healey must rule out any more tax rises, properly fund defence and stop maxing out our country’s credit card. Fiscal responsibility is the only way we will get Britain back on track.” Reform UK's Treasury spokesman Robert Jenrick added: “Burnham can’t help more people with tax relief because he refuses to cut a single piece of wasteful spending. "Reform would scrap £40 billion of waste so we can raise the tax-free personal allowance to £15,000 for everyone. That would be a tax cut for 40 million people, not just a few.” It comes as the PM has announced he will scrap the triple lock after the next general election to help pay for his social care reforms. Under Mr Burnham's proposals, the state pension would rise each year by inflation or 2.5%, with the automatic link to increases in average earnings dropped The Daily Express has a long-running campaign to protect the triple lock. The Treasury has been contacted for comment. Pension Triple lock Andy Burnham Budget 2026 Share Article Share Article Facebook X LinkedIn Reddit Bluesky Email Copy Link Link copied Add us as preferred source Comments