Thank you to all those who contacted me about the state pension tax threshold.
I know that this Government remains committed to supporting pensioners and giving them the dignity and security they deserve in retirement.
The previous Government made the decision to freeze the income tax Personal Allowance at its current level of £12,570 until April 2028. At the Budget in October, the current Government had to make difficult decisions, including on tax, in order to restore economic and fiscal stability, invest in the country’s future, and fix our public services. I welcome that despite this, the Government chose not to extend the freeze to the income tax personal allowance. This means that from April 2028, personal tax thresholds will once again be uprated in line with inflation.
I can also assure you that I am committed to supporting our pensioners more widely. Everyone in our society, no matter their working history or savings, deserves a comfortable and dignified retirement. I welcome the Government’s commitment to protecting the triple lock on pensions over this Parliament. Through this commitment, over 12 million pensioners benefitted from a 4.1% increase to their basic or new state pension in April 2025, gaining up to £470. 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. The Personal Allowance will also 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.
In addition, pension credit continues to provide a safety net for the poorest pensioners and those with additional needs, such as those with a severe disability, caring responsibility, responsibility for a child or certain housing costs. I welcome that the pension credit standard minimum guarantee also increased by 4.1% in April this year. By undertaking a nationwide campaign to increase the take-up of pension credit by those eligible, I am pleased to hear that the Department for Work and Pensions has received around 285,600 claims from July 2024 to May 2025 with almost 60,000 extra awards compared to the same period the previous year. I understand that further promotional activity is planned from this Autumn through to the end of the financial year, as part of a nationwide campaign aimed at eligible pensioners, their friends and their families.
Thank you once again to all those who got in touch about this important issue.