The Government has confirmed that it is committed to making sure pensioners whose only income is their pension will not pay income tax. Unless the freeze on personal tax allowance is raised, thousands of pensioners could be drawn into paying income tax for the first time next year.
However, a Treasury spokesperson confirmed this week that many pensioners will not pay income tax. The commitment was reported by the i Paper, and will see the new Chancellor John Healey stick to his predecessor's pledge.
State pension and tax liability
The state pension is liable to income tax, but generally pensioners whose only income is the state pension have not had to pay any. The full state pension for the current financial year is £230.25 a week, this falls below the personal tax allowance of £12,570 a year.
A Treasury spokesperson said: "Anyone 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 the highest Personal Allowance in the G7.
Rising number of taxpayers
The number of income taxpayers over state pension age is expected to rise from 9.08 million in 2025-26 to 9.58 million in 2026-27. The increase comes as the state pension age continues its phased rise from 66 to 67, while frozen tax thresholds mean more pensioners are expected to pay income tax.
HMRC also projects that around 7.7 million people will pay the higher rate of income tax in 2026-27, compared with 6.6 million in 2024-25. Since becoming Prime Minister, Mr Burnham has introduced a number of policies.
Bus fare cap announced
Millions of people will save a third on bus travel as Mr Burnham announced a cap on single bus tickets at £2 during his first week in office. Passengers will benefit from cheaper fares from January 1 2027 for the rest of the year, with maximum fares slashed by a third.
Mr Burnham said: "Good, affordable transport links are an essential. No one should be priced out of those and left behind.
"But for too long people have said that cheaper transport isn’t an option. I don’t accept that. I’ve done it before and I will do it again now: a £2 cap on bus fares for millions across the country."
He added: "Lower fares will help people get to where they need to – giving them breathing space to help with the cost of living.
"As I said on my first day in office – I will build a country for everyone, everywhere. That means more connected communities, better access to opportunities, and a lighter load on people's lives."
