The Department for Work and Pensions (DWP) has revealed the number of individuals who will be taxed on their State Pension in 2026.
Pensioners will only face taxation if they receive larger than average State Pension entitlements, such as those who benefit from additional earnings-related State Pension, inherited awards or Protected Payments, according to the Government.
Current estimates suggest that around 30% – equating to 4 million people – on the State Pension will be liable for tax on their State Pension in the financial year 2026/27.
Parliamentary Secretary for the Treasury, Torsten Bell, stated: « The headline rates of the basic and new State Pensions are currently below the level of the Income Tax Personal Allowance, so pensioners for whom that is their sole income pay no income tax. »
He added: « It is pensioners with larger than average State Pension entitlements, because of, for example, entitlement to additional earnings-related State Pension, inherited awards or Protected Payments under the new State Pension who will be liable for income tax on their State Pension income. », reports the Manchester Evening News.
Bell concluded: « Utilising DWP’s pensioner benefit forecasting model and the State Pension caseload forecast published at Spring Statement 2025, it is estimated that around 30% (approximately 4m) of State Pension recipients will be liable for tax on their State Pension award administered by DWP in 2026/27.
« This figure is a modelled estimate from DWP’s pensioner benefit forecasting model and therefore should not be treated as an official statistic. This is consistent with current personal tax allowance policy and the OBR’s Spring Statement 2025 State Pension forecasts. Tax liabilities considered are from DWP administered State Pension awards only. »
It follows State Pension payment rates rising in April. The annual increase is calculated using the triple lock – a system designed to ensure payment rates grow each year in line with whichever is highest amongst inflation, earnings or 2.5%.
This prevents pension values being eroded by cost of living pressures. In 2025, rates rose by 4.1% to match average earnings growth.
State Pension rates – breakdown
Full New State Pension
- Weekly payment: £230.25 (from £221.20)
- Four-weekly payment: £921 (from £884.80)
- Annual amount: £11,973 (from £11,502)
Full Basic State Pension
- Weekly payment: £176.45 (from £169.50)
- Four-weekly payment: £705.80 (from £678)
- Annual amount: £9,175 (from £8,814)
