Pensioners will not need to complete and submit self Assessment tax returns
The Department for Work and Pensions (DWP) has confirmed that pensioners whose sole income is the flat rate of the New or Basic State Pension will “not be required to pay tax next year” if the amount exceeds the Personal Allowance threshold of £12,570. The Personal Allowance will remain frozen at that level until April 2030.
Pensions Minister Torsten Bell informed MPs in Parliament on Monday that measures will be implemented to ensure no pensioner needs to complete and submit a Self Assessment tax return to HM Revenue and Customs (HMRC).
As reported by the Daily Record, his remarks followed concerns raised by Conservative MP Dr Luke Evans during DWP questions that the recent Finance Bill vote did not include any provision to prevent pensioners paying tax on their State Pension – if it’s their only source of income – something Chancellor Rachel Reeves had promised during the Autumn Budget.
Dr Evans said: “In the Budget, the Chancellor froze thresholds, which brings state pensioners into paying tax. This was raised with the Chancellor, who said that she did not want that to happen and that she would create a workaround.
“However, only two weeks ago we voted on the Finance Bill, which the Labour party pushed through, and as it stands that means that pensioners will pay tax on their state pension. What is the DWP doing to ensure that they will not pay tax on their state pension or have to submit a tax return?”
In response to the Hinckley and Bosworth MP, Mr Bell stated: “It has been confirmed that those whose income is only the basic level of the Basic State Pension or the New State Pension will not be required to pay tax next year, because the level of Personal Allowance has been set above the level of the new state pension.
“What the Chancellor said at the Budget was that in future years we will make sure that no pensioner will be required to fill in a Self-Assessment form, or indeed a simple Self-Assessment form, for any tax that is due because the new state pension level is above that of the personal allowance.”
Millions of elderly individuals are set for a substantial State Pension increase in April following Secretary of State for Work and Pensions Pat McFadden’s recent confirmation of the proposed rates for the 2026/27 financial year.
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The suggested new payment rates for the State Pension and benefits have been presented to Parliament and will take effect on April 6.
The rise will see those receiving the full New State Pension get £241.30 per week, whilst those on the maximum Basic State Pension would get £184.90 per week.
It’s crucial to note that the State Pension amount someone receives is based on their National Insurance contributions. To qualify for the full New State Pension, approximately 35 years’ worth are needed, though this may vary if you were ‘contracted out’.
The full New State Pension will rise by approximately £574 to £12,547 during the new financial year.
New State Pension payment rates 2026/27
Full New State Pension
- Weekly: £241.30 (from £230.25)
- Four-weekly pay period: £965.20
- Annual amount: £12,547
Full Basic State Pension
- Weekly: £184.90 (from £176.45)
- Four-weekly pay period: £739.60
- Annual amount: £9,614
Other State Pension rates
- Category B (lower) Basic State Pension – spouse or civil Partner’s insurance: £110.75 (from £105.70)
- Category C or D – non-contributory: £110.75 (from £105.70)
Full details on Additional State Pension, Widows Pension, increments and Invalidity Allowance can be found on GOV.UK.
State Pension and tax
Guidance on GOV.UK states: “You pay tax if your total annual income adds up to more than your Personal Allowance. Find out about your Personal Allowance and Income Tax rates.
Your total income could include:
- The State Pension you get – Basic or New State Pension
- Additional State Pension
- A private pension (workplace or personal) – you can take some of this tax-free
- Earnings from employment or self-employment
- Any taxable benefits you get
- Any other income, such as money from investments, property or savings
Check if you have to pay tax on your pension
Before you can check, you will need to know:
- If you have a State Pension or a private pension
- How much State Pension and private pension income you will get this tax year (April 6 to April 5)
- The amount of any other taxable income you’ll get this tax year (for example, from employment or state benefits)
You cannot use this tool if you get:
- Any foreign income
- Marriage Allowance
- Blind Person’s Allowance
Use this online tool at GOV.UK to check if you have to pay tax on your pension. The full guide to tax when you get a pension can be found on GOV.UK here.