State pension: John Healey raises tax-free allowance to protect nearly one million pensioners from income tax

John Healey raises tax-free allowance to protect nearly one million pensioners from income tax From April 2027, the full new state pension will increase to £13,036 a year Sign up to the Money Newsletter I agree to receive updates and information about my account, the GB News Community, and related products and services from GB News. Email address Sign up By signing up you agree to the Terms and Conditions and Privacy Policy and Community Rules.

Thank you for signing up! See the latest from GB News here . Choose GB News on Google - add us as a preferred source Choose GB News Support GB News Champion free speech and independent journalism while unlocking exclusive benefits. Support us Low-income pensioners will be protected from paying tax on their State Pension after John Healey raised their tax-free allowance to £13,036. However, millions receiving even modest income from workplace or private pensions could miss out and continue paying tax under the existing rules.

The Chancellor announced the targeted protection in his first Budget after the full new State Pension rose above the standard Personal Allowance. From April 2027, the full new State Pension will increase to £13,036 a year. This is £466 above the frozen Personal Allowance of £12,570. Without the change, someone receiving the full amount could have faced an income tax bill of around £93 a year, despite having no other source of income. TRENDING Stories Videos Your Say Under the new rules, the tax-free allowance for people relying solely on the State Pension will rise to match the full annual payment.

The allowance will then increase alongside the State Pension for the remainder of the current Parliament. However, the protection will not apply to pensioners receiving additional taxable income from workplace or private pensions. Kate Smith, head of pensions at Aegon, welcomed the support for people on the lowest incomes but warned that it could be viewed as unfair by those who had saved for retirement. She said: "Protecting those who rely solely on the State Pension from paying income tax will be welcome news for some of the lowest-income pensioners.

"However, there is a risk that creating a more generous tax position for those who have not built-up additional retirement savings could be seen as unfair by people who have had the means to do the right thing and saved through workplace and private pensions." Ms Smith said retirement policy should support saving while treating different generations and groups of pensioners fairly. The tax free allowance will increase alongside the state pension for the remainder of the current Parliament | {{ item.credit }} Patrick Thomson, head of research analysis and policy at Standard Life Centre for the Future of Retirement, said the change would spare affected pensioners both a tax bill and the additional administration involved in paying it.

He said: "This will be a relief for those affected, avoiding both an unexpected tax bill and additional tax administration. "The protection could be worth around £93 in the first year and nearly £770 over the duration of the Personal Allowance freeze, based on the minimum 2.5% State Pension guarantee. But if increases are higher, the saving could be greater." However, Mr Thomson warned that the eligibility rules would determine how many pensioners benefited.

How the state pension triple lock has changed over the years | GB NEWS/FIDELITY INTERNATIONAL He said: "If it applies only to those whose sole income is the State Pension, people with even relatively modest workplace or private pension income could still be affected." The difference in treatment could become more pronounced if the State Pension continues rising while the standard Personal Allowance remains frozen. Mr Thomson added: "What looks like a relatively simple solution could become more complicated over time as the State Pension continues to rise against a frozen Personal Allowance, widening the difference in tax treatment between those relying on the State Pension alone and those with relatively small amounts of additional retirement income."

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