Rachel Reeves is under pressure over pensions as support for change hit a key threshold (Image: Getty)
Support has soared for a campaign urging Chancellor Rachel Reeves to double the income tax threshold for state pensioners smashing through a barrier meaning MPs will debate the plans. Currently, the initial threshold permitting people to earn without paying tax sits at £12,570.
State pensions are forecast to surpass that limit by 2027 due to the triple lock, according to projections. Now a peititon on the Parliament website has hit 100,000 signups meaning a debate will take place in the Commons – meaning pressure will be put on Ms Reeves with the spring statement imminent.
Ms Reeves has suggested that those receiving only the full new state pension will not face tax bills – however, millions more will be dragged into paying additional tax.
The campaign demands that pensioners receive a separate tax code allowing them to earn £25,140 before paying tax. The debate in Parliament means Ms Reeves’ Treasury will be required to defend its position and provide updates on plans.
The Spring Statement has been confirmed for March 3. Over just the past 14 days, it has surged by more than 50,000 signatures, bringing the total to 100,907, meaning has secured a debate with MPs and the Treasury. The proposal recommends that pensioners should be able to earn £25,140 before paying tax – double the £12,570 personal tax allowance
In her second Budget, the Chancellor unveiled £26 billion worth of tax increases across multiple areas, described at the time as a “smorgasbord” approach designed to create greater financial headroom for her spending and borrowing proposals.
The measures included freezing income tax thresholds, following speculation that the headline rate could rise for the first time in decades. This locked the lower personal tax allowance at £12,570 until 2031 in a decision that could impact state pensioners.
A ceiling on salary sacrifice arrangements, including voluntary additional pension contributions, and the “high-value council tax surcharge”, effectively a “mansion tax” on English properties valued above £2 million, were also amongst the increases.
The Treasury has responded to the campaign regarding tax thresholds for pensioners. The petition received an official response recently – shortly after Chancellor Rachel Reeves extended the threshold freeze until 2031 – meaning those receiving the full new State Pension will face tax obligations from 2027, provided the triple lock mechanism, guaranteeing annual rises of at least 2.5 per cent, continues.
The petition, which can be accessed here, has garnered 101,354 signatures – prompting an official Treasury response. Timothy Hugh Mason, who started the campaign, said: “We want the government to introduce a new tax code for state pensioners, set at double the basic threshold. If this was implemented, pensioners would receive a higher tax-exempt limit, but wealthier pensioners would still pay tax.
“We think that people with small private or workplace pensions are currently being taxed unfairly. ” The Treasury has confirmed that decisions concerning those receiving only the full new state pension and the £12,570 personal tax allowance will be taken in 2026.
During her Budget speech in November, Ms Reeves committed that those solely receiving the full new state pension would be exempt from taxation or the need to complete tax returns, though she stopped short of explaining how this would be delivered. The Treasury has now disclosed it will formulate a plan in 2026.
In an official statement, the Government announced: “As announced at the Budget, the government will ease the administrative burden for pensioners whose sole income is the basic or new State Pension without any increments so that they do not have to pay small amounts of tax via Simple Assessment from 2027-28, if the new or basic State Pension exceeds the Personal Allowance from that point.
The government is exploring the best way to achieve this and will set out more detail next year. ” In response to proposals for increasing the minimum tax threshold for pensioners to £25,140, the Treasury said: “The State Pension is the foundation of support for pensioners.
“The Government is committed to a fair tax system but doubling the Personal Allowance for pensioners would be untargeted and costly.”
The department went on to say: “The State Pension is the foundation of support available to pensioners. The government is committed to the Triple Lock – one of the most generous State Pension uprating mechanisms in the world – for the duration of this Parliament. This will increase the basic and new State Pension by 4.8% next April, boosting pensioner incomes by up to £575 a year and strengthening retirement security.”
Officials continued: “The Personal Allowance is already the highest amongst G7 countries. Doubling this allowance for all pensioners would be costly and untargeted – disproportionately benefiting higher-income pensioners.
“The triple lock formula is expected to raise the full new State Pension from £230.25 to £241.30 weekly (£12,548 annually) from next year, positioning it marginally below the threshold.”
To view and sign up to the petition click here.
