The Treasury has said it is "committed" to a policy that will stop pensioners whose only income is the full new state pension from paying income tax, with fresh details expected in the coming months.
The change is set to take effect before next April, when the triple lock increase is due. That increase threatens to push the full new state pension above the frozen £12,570 personal allowance threshold, meaning those whose only income is the state pension would otherwise have to pay income tax on their payments.
New policy announced at Autumn Budget
The Government announced at its 2025 Autumn Budget that it would bring in new rules to prevent this. Former Chancellor Rachel Reeves said new rules would be introduced so people whose only income is the state pension without extra amounts would not pay income tax.
The exact details of how this will work have yet to be made public. HMRC officials said previously that fresh legislation would likely be needed to bring in the new policy.
Possible solutions and debate
Kate Smith, head of pensions at pension provider Aegon, said the most likely solution would come through changes to the tax system. She said: "If the Government presses ahead with plans to ensure those receiving only the new state pension don't pay income tax, the most likely solution is through changes to the tax system.
"Whether that's delivered through a new tax code, a higher allowance or another mechanism remains to be seen, but it would help prevent future triple lock increases dragging more pensioners into paying tax."
Ms Smith added that the policy could spark sharp disagreements. She said: "If changes come, there will inevitably be debate over whether it is fairer to increase the personal allowance for all taxpayers rather than create a special exemption that only benefits pensioners."
Treasury statement
The Treasury was asked for an update on the plans and whether more details could be announced at the Autumn Budget. Recently appointed Chancellor John Healey will present this fiscal statement on October 28.
An HM Treasury spokesperson said: "Pensioners whose only income is the full new or basic state pension without any increments will not pay income tax and we are committed to that over this Parliament. By keeping the triple lock, 12 million pensioners will see their income rise by up to £470 this year, and they continue to benefit from one of the most generous personal allowances in the G7."
The department confirmed work is currently "underway" and that more details will be published in due course.
