A UK government minister has moved to reassure pensioners about their future finances after growing concerns over the frozen personal allowance and how it could affect their tax status.
As the State Pension continues to rise each year, many pensioners with extra income from savings or private pensions are being pushed into paying income tax—something that wasn’t expected by many retirees.
Why Are Pensioners Worried?
The Personal Allowance—the amount you can earn before you start paying income tax—has been frozen at £12,570 since 2021. At the same time, the State Pension increases each year under the triple lock system, which promises a rise based on whichever is highest:
- 2.5%
- Inflation
- Average earnings
In April 2025, the new full State Pension rose to £11,973 a year, which is just £600 below the tax-free limit. This means pensioners with any extra income (like private pensions or rental income) may now fall above the tax threshold and start paying tax.
What the Minister Said
Pensions Minister Torsten Bell addressed the issue in the House of Commons, where he confirmed the government’s commitment to the triple lock and tried to calm concerns about taxation.
He said:
“Over 12 million pensioners will benefit from our commitment to protect the triple lock, which is set to increase State Pension spending by around £31 billion. It will raise people’s pensions by up to £1,900 during this Parliament.”
He also pointed out that:
“The Personal Allowance is still higher than the full basic and new State Pensions, meaning those whose only income is their State Pension do not pay income tax.”
Why the Tax Threshold Remains Frozen
Mr Bell confirmed that the Personal Allowance freeze until April 2028 was a decision made by the previous government. He added that the current government, during its first Budget, chose not to extend that freeze further.
This means the tax threshold will stay at £12,570 for at least another three years.
While the triple lock continues to protect pensioners’ incomes, the frozen tax-free allowance means more pensioners with additional sources of income will gradually be pulled into paying tax.
The government says those on just the State Pension won’t be affected, but many still feel the system is becoming unfair, especially during a time of rising living costs. The reassurance from the minister may help calm fears—but concerns about income tax and pensioner finances are likely to continue.
FAQ’s
Why are more pensioners paying tax now?
Because the State Pension has increased while the personal tax-free allowance has stayed frozen at £12,570, many pensioners with extra income are now crossing the tax threshold.
Will the personal tax-free allowance increase soon?
No, the allowance is frozen at £12,570 until April 2028 as per a previous government decision. The current government has not extended this freeze but hasn’t raised the limit either.
Do all pensioners have to pay income tax?
No. Pensioners who receive only the full State Pension and no other income will not pay income tax, as their total income remains below the £12,570 threshold.
What is the triple lock on pensions?
The triple lock guarantees that the State Pension will rise each year by the highest of 2.5%, inflation, or average wage growth.
What has the government said about pensioners’ income security?
Minister Torsten Bell said the government remains committed to the triple lock and to giving pensioners dignity and security in retirement.
