Tax Pledge on Pensions by Chancellor John Healey

By the Editorial Team · Saturday, July 25, 2026

Chancellor John Healey confirmed that pensioners who receive only the state pension will not have to pay income tax despite the personal tax allowance freeze potentially pushing some into the tax net next year. This reassurance preserves current tax protections for pensioners during this parliamentary term while leaving room for future tax policy adjustments in upcoming budget discussions.

Chancellor John Healey has assured that pensioners whose sole income is the state pension will not be required to pay income tax, despite concerns that a freeze on personal tax allowances could have drawn thousands of pensioners into the tax net from next year.

Currently, the full state pension amounts to £230.25 per week, which is below the personal tax allowance threshold of £12,570 annually. However, with forecasts indicating the state pension may surpass this limit in the coming financial year, questions arose about the tax implications for pensioners relying exclusively on this income. A Treasury spokesperson clarified that anyone whose only income is the full new or basic state pension, without additional increments, will remain exempt from income tax throughout this parliamentary term.

This announcement maintains a policy commitment first introduced by the previous chancellor and signals continuity in the government's approach amid ongoing discussions on tax and pension policies. The government also highlighted that the triple lock mechanism will increase pensioners' incomes by up to £470 this year. Officials emphasized that the UK continues to benefit from the highest personal tax allowance in the Group of Seven (G7) economies.

Separately, Andy Burnham, another senior government figure, indicated that there is no immediate plan to raise the personal tax allowance to help address cost-of-living pressures, though he expressed willingness to consider it during the upcoming budget deliberations. Burnham acknowledged public frustration over the frozen allowance, which has remained static since 2021, but stopped short of committing to any changes ahead of the budget. He described his approach as one of transparency and honesty, recognizing that adjustments to tax thresholds might be explored alongside other fiscal measures.

Together, these statements suggest the government intends to preserve existing tax protections for pensioners relying solely on the state pension, while remaining open to broader tax policy reviews as part of future budget planning.

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