Summary
The UK government has promised not to tax state pensions before 2030. This pledge aims to benefit those who only receive a state pension by keeping them free from income tax. However, some experts are concerned about fairness and complexity, as most pensioners have other incomes and already pay taxes.
Key Facts
- The UK government plans not to tax state pensions for those who only receive this income.
- Chancellor Rachel Reeves confirmed the pledge in her Budget speech.
- The state pension is expected to exceed the tax-free amount in April 2027.
- Those solely on a new flat-rate state pension will get £12,547.60 next year, just below the tax threshold.
- Many pensioners, about three-quarters, pay income tax due to additional incomes.
- Experts highlight potential fairness issues as workers earning the same as a state pension might still pay tax.
- The policy has no detailed costing in the Budget documents, indicating it's still developing.
- The approach aims to simplify tax collection for small amounts owed by pensioners.
