Rachel Reeves, in a conversation with Martin Lewis, confirmed that individuals who solely rely on the state pension as their income will not be required to pay taxes. The Chancellor announced in the latest 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 in April 2026.
This adjustment places the new state pension just below the £12,570 personal allowance threshold, which denotes the income limit before tax obligations kick in. Experts had cautioned that millions of pensioners solely dependent on the state pension might face tax liabilities when the pension rises again in April 2027.
The state pension undergoes yearly increments in accordance with the triple lock mechanism. The Chancellor’s statement also ensures that individuals receiving only the basic or new state pension will be exempt from “paying small amounts of tax through Simple Assessment.”
Despite the new full state pension being close to the tax threshold, Rachel Reeves assured in an interview with Martin Lewis that individuals whose sole income is the state pension will be tax-free for the current parliamentary term. However, beyond this term, no commitments have been made yet regarding tax obligations. Martin Lewis emphasized that starting from 2027, tax will be due on the full new state pension as it surpasses the tax-free allowance.
Further details on the implementation of tax exemptions for state pension recipients were not provided at the time. The triple lock policy ensures that the state pension sees annual increases in line with the highest figure between earnings growth from May to July, inflation in September, or a minimum of 2.5%. The current 4.8% wage growth from May to July has dictated the state pension rise for April 2026.