The full new state pension is on course to rise above the frozen £12,570 personal allowance for the first time next April. This leaves the government just over a week from a Budget to say how it will honour its pledge that pensioners with no other income will not face small tax bills.
Figures published by the Office for National Statistics on 15 September showed average total earnings 3.9% higher in May to July than a year earlier. Under the triple lock, which raises the state pension by the highest of earnings growth, September inflation or 2.5%, that sets a floor for next April's increase. September's inflation figure is due on 21 October.
A 3.9% rise would take the full new state pension from £241.30 a week, or £12,547.60 a year, to about £250.70 a week and roughly £13,036 a year. That is around £466 above the personal allowance, which has been frozen since April 2021 and which the Budget of November 2025 held at £12,570 for a further three years, to April 2031.
The gap matters because the government's commitment to spare those pensioners has never been given a working mechanism. The House of Commons Library's briefing on the taxation of the state pension, updated last month, records that the government "has not published any further details of how this is to be done". John Healey, who succeeded Rachel Reeves as Chancellor on 20 July under Prime Minister Andy Burnham, delivers his first Budget on Wednesday 28 October, with the Office for Budget Responsibility publishing its forecast alongside it.
Reeves made the original commitment in the Commons on 26 November 2025. "At the same time, we are ensuring that people only in receipt of the basic or new state pension do not have to pay small amounts of tax through simple assessment from April 2027," she said. Simple Assessment is the HMRC process for collecting tax from people who are not on PAYE and do not file a return, a group that includes many pensioners.
The Budget document attached a condition that has since become the focus of criticism, stating: "The government will ease the administrative burden for pensioners whose sole income is the basic or new State Pension without any increments". In its response to a petition in December 2025, the Treasury said: "The government is exploring the best way to achieve this and will set out more detail next year."
Under Healey the Treasury has restated the pledge in stronger terms. A spokesperson told LBC in July: "Anyone whose only income is the full new or basic State Pension without any increments will not pay income tax".
Ministers in Parliament have kept to narrower language. In a written answer on 25 June, the Pensions Minister, Torsten Bell, said the government "will ease the administrative burden for pensioners so that they do not have to pay small amounts of tax via Simple Assessment from 2027/28." In September he said pensioners who only just exceed the allowance "will not have the administrative burden of paying small amounts of tax in this Parliament", according to Which?. GB News reported him adding that the Chancellor would set out further details at the Budget.
The Low Incomes Tax Reform Group, a tax charity, noted last December that the announcement had been read two ways, as either a purely administrative change or a decision that the tax would not be due at all. The Commons Library briefing records that the government has not published any further details.
Sir Steve Webb, a former pensions minister and partner at the consultancy LCP, has argued the "without any increments" condition shuts out most pensioners, including those on the old system whose state pension includes additional earnings-related entitlements. LCP analysis published in May estimated that one in 16 pensioners would benefit and put the Simple Assessment bill for someone wholly dependent on the new state pension at about £88 in 2027-28.
"The Government's plans to address this point are a mess, and likely to benefit only a small fraction of pensioners," Webb said. "They will also create unfairness between different groups of pensioners and between pensioners and low-paid workers, who do not qualify for any exemption."
The Treasury has published no estimate of its own of how many people would qualify. The Commons Library gives a "ballpark figure" of between 800,000 and one million pensioners whose only income is the state pension.
The wider freeze on the allowance is a separate question. Burnham has said he will keep Labour's manifesto pledges on tax, and has described frustration about the frozen £12,570 allowance as something he heard on doorsteps during the Makerfield by-election campaign. In July, following an interview with The Times, he said there was "no commitment" to change it, but that the government would look at it at the Budget.
Reeves, asked about the pledge on ITV after her Budget, told Martin Lewis: "I make that commitment for this parliament." The Budget document itself dates the easement from 2027-28; no published text has reconciled the two.
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