The Times reported that the UK may raise the personal tax allowance for some low-income pensioners to match the full new state pension, as pension payments rise against a frozen tax threshold.
The government pledged in its 2025 Budget to provide tax relief to people whose only income is the basic or new State Pension without increments. It has not announced a higher allowance as the way to deliver that pledge.
Under the reported proposal, the allowance would reach £13,036 in 2027–28, matching the full new state pension for that year. The current standard personal allowance is £12,570. A pensioner-specific increase would benefit those who qualify, while workers on similarly low incomes would not receive the extra allowance.
Former pensions minister Steve Webb raised concerns about how complicated the arrangement could be, The Guardian reported. Britain previously had a higher age-related allowance, which was phased out after 2013–14, the newspaper noted.
EconoTimes previously covered a Deutsche Bank forecast that included income-tax relief for low-income pensioners. Chancellor John Healey is due to present the Budget on Wednesday, Oct. 28.
