Overview
- Answering MPs, the Chancellor restated that people whose only income is the basic or new state pension will not be taxed on it during this Parliament, with the mechanism still to be defined.
- The OBR projects 600,000 pensioners will enter the tax net this year, rising toward one million by the end of the Parliament as thresholds stay frozen.
- The full new state pension rises 4.8% in April 2026 to £241.30 a week (£12,547.60 a year), putting it on course to exceed the £12,570 personal allowance from April 2027.
- HMRC told the Treasury Committee that new legislation is required, a project team is in place, and the exemption system is expected to be operable from April 2027.
- Officials said the change will alter the current ‘simple assessment’ process used to collect small sums from pension-only recipients, with detailed rules to follow.