People who only claim state pension will not be taxed

Rachel Reeves has insisted that people receiving only the state pension will not have to pay tax, despite fears that the decision to freeze tax thresholds at the Budget could leave pensioners liable to do so.

- MILLIE COOKE POLITICAL CORRESPONDENT

The chancellor said the Treasury would not go after “tiny amounts of money” from state pensioners, pledging that they would not pay any tax during this parliament.

Generally, pensioners whose only income is the state pension have not had to pay any income tax because the full state pension - currently £230.25 a week - falls below the personal tax allowance of £12,570 a year.

But for the first time since its introduction, the new state pension is set to exceed the personal allowance in the 2027-28 tax year under the triple-lock policy, which guarantees that it increases by whichever is higher of the rate of inflation, average earnings growth, or 2.5 per cent.

It comes after the Treasury announced plans to freeze income tax thresholds until the 2030-2031 tax year, a move which is set to raise £7.6bn in revenue by 2030 and drag millions more people into paying higher income tax.