Chancellor John Healey is set to protect low-income pensioners from income tax in his debut Budget this Wednesday. The initiative aims to fulfill a government pledge to shield those who rely solely on state pension income from tax liabilities. The government had already committed to not taxing people who only get an income from the state pension.
From April, the full, flat-rate state pension is projected to rise by 3.9% to £13,036.40 annually. Without intervention, this increase would push payments above the £12,570 personal tax allowance. To address this, the Chancellor will introduce a new tax allowance specifically for low-income pensioners. Meanwhile, the Conservatives and Reform UK have presented alternative Budget proposals, which include significant reductions to the national welfare bill. This would take the payment above the £12,570 personal tax allowance and therefore be liable for income tax if no changes are made.
