Treasury update on changes to how state pension is taxed
The Treasury has shared an update about a major change to tax on the state pension. The department says it is "committed" to the new policy, which is due to take effect over the coming months.
TL;DR
- The full new state pension is expected to surpass the £12,570 personal allowance threshold next April.
- This increase, driven by the triple lock mechanism, will mean thousands of pensioners may pay income tax for the first time.
- The government has pledged to introduce a policy to exempt pensioners whose only income is the state pension from this tax.
- Details on how this exemption will be implemented are still pending, with further announcements expected.
- The personal allowance has been frozen at £12,570 since 2021 and is set to remain so until April 2031.