Rachel Reeves has confirmed to Martin Lewis that individuals relying solely on the state pension as their income will not be required to pay taxes. The Chancellor announced in the Budget that the state pension will see a 4.8% increase, raising the full new state pension from £230.25 per week to £241.30 per week (£12,547.60 annually) starting April 2026.
This adjustment places the state pension just below the £12,570 personal allowance threshold, which is the income level exempt from taxation for each tax year. Concerns were raised by analysts that millions of pensioners who solely depend on the state pension might face tax liabilities when the pension rises again in April 2027.
Yearly state pension increments are tied to the triple lock mechanism. The Chancellor also assured that individuals receiving only the basic or new state pension will not be subject to minor tax payments through Simple Assessment.
While the new full state pension is nearing the tax-free allowance of £12,570, Reeves emphasized in an interview with Martin Lewis that during this parliamentary term, no taxes will be imposed. However, she refrained from making commitments beyond the current term. Lewis mentioned in a post that from 2027, taxes will be due as the full new state pension will surpass the tax-free threshold.
The triple lock ensures annual state pension adjustments based on the highest of earnings growth between May to July, September inflation rate, or a minimum of 2.5%. With the highest wage growth recorded for May to July at 4.8%, this figure dictates the state pension rise for April 2026. Additional details on the tax exemption for state pension recipients were not provided at the time.