𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

State pensioners have been issued a £12,570 warning following the revelation of how many will be drawn into paying tax after Chancellor Rachel Reeves confirmed that tax thresholds will remain static. Despite a significant campaign to raise the lowest income tax threshold, this decision implies that from 2027, individuals solely on the full new state pension will exceed this limit.

The Office for Budget Responsibility’s (OBR) forecast, released in conjunction with Chancellor Rachel Reeves’s spring statement on Tuesday, suggested that an additional 600,000 pensioners than previously projected will be subject to income tax by 2026-27. This number is expected to rise to 1 million by 2030-31.

Whilst the state pension is subject to income tax, typically, pensioners whose only income is the state pension have not had to pay any. This is because the full state pension for the current financial year is £230.25 a week, which falls beneath the personal tax allowance of £12,570 annually.

In her November 2025 Budget, Chancellor Rachel Reeves extended a freeze on the personal allowance until 2031. It was confirmed in yesterday’s spring statement that this would remain unchanged.

Some of Britain’s most financially vulnerable workers face being taxed the moment their earnings surpass that figure – and because it has remained static, inflation and wage growth mean that significantly more people are now liable for tax than would have been the case had it increased in line with historical precedent.

Projections indicate the state pension will surpass this amount by 2027 due to the triple lock arrangement. A petition on the Parliament website gathered 100,000 signatures, ensuring it will be discussed in the Commons – although no date has yet been confirmed.

The petition demands pensioners receive a separate tax code allowing them to earn up to £25,140 tax-free. The parliamentary discussion means Ms Reeves’ Treasury will be required to defend its position and provide transparency regarding future intentions.

The suggestion proposes pensioners should have a £25,140 income threshold before tax becomes applicable – double the current £12,570 personal allowance. In her second Budget, the Chancellor unveiled tax increases totalling £26 billion across multiple areas, described at the time as a “smorgasbord” approach designed to create additional fiscal space for her spending and borrowing objectives.

For the first time since its establishment, the full new state pension is expected to exceed the personal allowance in the 2027-28 tax year under the triple-lock mechanism, guaranteeing rises aligned with inflation, earnings or 2.5%.

HM Revenue and Customs has revised its modelling of the consequences of the threshold freezes on those whose primary income source is the state pension, the OBR stated. Some pensioners with supplementary income sources will already be liable for tax before 2027-28, according to the watchdog.

“The updated modelling of this population across all personal tax threshold freezes since April 2021 increases the estimate of the number of people brought into paying tax by 600,000 in 2026-27 and one million in 2030-31,” the OBR wrote.

“However, much of this population is projected to pay only very small additional amounts of tax due to the freezes, so this only increases the yield of the November 2025 Budget measures by £0.1 billion in 2030-31.”

The OBR also noted that the Government has committed to shielding those whose sole income derives from the state pension from taxation during this Parliament, though specifics remain outstanding.

The Government reaffirmed its intention to protect those dependent on the state pension and to announce the policy details well ahead of the April 2027 implementation.

The Liberal Democrats insisted Ms Reeves must immediately clarify how pensioners will be safeguarded from these hidden tax increases.

The party’s Treasury spokesperson, Daisy Cooper, said: “Buried in the small print of today’s spring statement is a shock stealth grab hitting another one million pensioners.

“For poorer pensioners, every penny counts, and these unfair tax hikes could be the final straw. Rachel Reeves must urgently explain how she will protect older poorer pensioners from this stealth tax squeeze.

“Pensioners have worked hard all their lives, paid into the system and played by the rules. Poorer pensioners should not be made to pay the price for this Labour Government’s economic failure.”

To see the petition on pensioners’ tax, click here.