State pensioners relying solely on their state pension will not be required to pay tax, Martin Lewis has revealed following a conversation with Chancellor Rachel Reeves.
Ahead of his budget explainer special on ITV this evening, Reeves disclosed this crucial detail to the MoneySavingExpert founder, clarifying new rules affecting pensioners.
The new flat-rate state pension, applicable to those reaching state pension age after April 2016, will rise to £241.30 per week or £12,547.60 annually—an increase of £574.60. This pushes the state pension above the current personal tax allowance of £12,570.
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During a segment on the Martin Lewis Money Show Live, Lewis posed a viewer’s question to the Chancellor. The viewer, Rebecca, asked if her 85-year-old father with dementia would need to file a tax return since his state pension income exceeded the personal allowance.
Reeves reassured: “If you only receive a state pension and have no other pensions or income sources, you will not need to complete any tax return.”
She further explained that pensioners with no additional income would not have to pay tax on their state pension during this Parliament’s term. While she couldn’t commit beyond this timeframe, the government is exploring a straightforward solution for the future.
Lewis clarified that if someone has other income—even as little as £50 from a private pension—they will be liable for tax on earnings exceeding the £12,570 personal allowance.
Returning to the studio after the interview clip aired, Lewis expressed his surprise: “What was announced in yesterday’s Budget is that people won’t need to do an assessment, and many missed that point. But the Chancellor explicitly confirmed you won’t have to pay tax if your income is solely from the new state pension for at least the next three years, possibly longer.”
This announcement provides welcome relief for many pensioners concerned about their tax obligations amidst rising pension income.