Rachel Reeves, during an interview with Martin Lewis, confirmed that individuals relying solely on the state pension as their income will not be liable to pay tax. The Chancellor announced in the Budget that the state pension will see a 4.8% increase, raising the full new state pension from £230.25 per week to £241.30 per week (£12,547.60 annually) starting April 2026. This adjustment places the state pension just below the £12,570 personal allowance threshold, which signifies the income level before tax obligations kick in.
Concerns were raised by analysts that millions of pensioners dependent on the state pension might face taxation as it increases again in April 2027. The state pension elevates annually following the triple lock mechanism. The Chancellor specified that individuals solely receiving the basic or new state pension will be exempt from paying minor tax amounts through Simple Assessment.
The new full state pension is positioned slightly below the £12,570 personal allowance, indicating its proximity to the tax threshold. Reeves stated in an interview with Martin Lewis that individuals with the state pension as their sole income will be tax-exempt during this Parliament, with future considerations pending further evaluation. Martin Lewis highlighted that from 2027, the full new state pension will surpass the tax-free allowance, triggering tax liabilities.
The Chancellor’s assurance that assessments wouldn’t be necessary was contradicted by Reeves on Martin Lewis’s show, affirming no tax obligations for this parliamentary term. In the Budget, the Chancellor outlined that individuals solely receiving the basic or new state pension will not be subjected to minor tax payments via Simple Assessment, although detailed procedures were not disclosed at that time.
The state pension’s annual increase is guaranteed by the triple lock mechanism, pegged to the highest among earnings growth from May to July, inflation in September, or a minimum of 2.5%. The 4.8% wage growth recorded from May to July determined the state pension’s elevation for April 2026.