People deriving income solely from state pension won’t be taxed, says chancellor

Tax exemption for state pension recipients

The UK chancellor has confirmed that people whose entire income comes from the state pension will not pay income tax. This clarification follows earlier concerns that rising pension payments might push low-income retirees into the tax system.

Details of the clarification

The policy effectively creates a two-tier arrangement among retirees:

Those who rely only on the new state pension will remain below the tax threshold.
Those with private or occupational pension income will still be subject to taxation.

The Treasury’s statement suggests the move aims to protect pensioners from additional financial strain amid inflation and cost-of-living pressures.

“No pensioner who relies solely on the state pension will have to pay income tax,” said the chancellor during the announcement.

Reactions and implications

Analysts noted that, while the measure protects some retirees, it may deepen inequalities between different groups of pensioners. Pensioners with supplementary private income may gain less in real terms due to continued tax obligations.

The clarification is expected to influence upcoming fiscal discussions about pensions and retirement income fairness.

Author’s summary: The UK government confirmed that pensioners living solely on the state pension will be exempt from income tax, marking a key distinction from those with private pension income.

The Guardian — 2025-11-29

Tax exemption for state pension recipients

Details of the clarification

Reactions and implications

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