The DWP has issued an update on proposals to increase the personal allowance for state pensioners. You can currently earn up to £12,570 under the personal allowance, with no income tax to pay. The full new state pension is currently £230.25 a week, or £11,973 a year, just £600 away from attracting an income tax bill.
Labour MP Scott Arthur asked Chancellor Rachel Reeves in a written question in Parliament if there are any plans underway to increase the personal allowance « to accommodate future increases in state pension. » State pension rates increase each April in line with the triple lock, which guarantees payment go up in line with the highest of 2.5 percent, the rise in average earnings or inflation.
Treasury minister Dan Tomlinson provided a response from the Government. He said: « This Government remains committed to supporting pensioners and giving them the dignity and security they deserve in retirement.
« Through our commitment to protect the triple lock, over 12 million pensioners benefitted from a 4.1 percent increase to their basic or new state pension in April 2025. Over the course of this Parliament, the full yearly rate of the new state pension is expected to increase by around £1,900 based on the Office for Budget Responsibility’s latest forecast. »
What is Labour’s policy on increasing the personal allowance for state pensioners?
Turning to the question of increasing the personal allowance, Mr Tomlinson said: « The personal allowance – the amount an individual can earn before paying tax – will continue to exceed the basic and full new state pension in 2025/26.
« This means pensioners whose sole income is the full new state pension or basic state pension without any increments will not pay any income tax.
« The previous Government made the decision to freeze the income tax Personal Allowance at its current level of £12,570 until April 2028.
« The current Government is committed to keeping people’s taxes as low as possible while ensuring fiscal responsibility and so, at our first Budget, we decided not to extend the freeze on personal tax thresholds. »
Another aspect of the state pension age that is under discussion is the state pension age. This is increasing from the current 66 to 67 between 2026 and 2028.
A review is to take place looking at the issue of where the access should be set. There is another increase from 67 to 68 timetabled for between 2044 and 2046, but the last state pension age review recommended bringing forward the timetable for this.
