The income tax protection for pensioners living only on the state pension will take the form of an extra tax-free allowance set at the level of the full new state pension, Financial Reporter reports. It will last for this parliament only and does not apply to all pensioners.
According to Financial Reporter, the state pension goes above the personal allowance for the first time in April 2027. The allowance is frozen at £12,570 until April 2031.
Analysis by Standard Life, cited by Financial Reporter, puts the protection at about £93 in the first year. Over the personal allowance freeze it is worth nearly £770, assuming the state pension rises by the minimum 2.5% each year.
Financial Reporter warns of a possible cliff edge. Unless there is a taper, someone £1 over the limit could pay an extra £200 in tax by year three.
Financial Reporter also reports that the Chancellor, John Healey, confirmed changes to the state pension triple lock from 2030. No detail was given, and the report has not been independently confirmed.