HMRC issues statement over state pension tax changes | Personal Finance | Finance
HMRC has released a statement about looming changes to tax on the state pension. The update comes after Chancellor Rachel Reeves recently spoke to MPs about the policy change.
As announced in the Autumn Budget 2025, the Government is bringing in a policy to ensure state pensioners who only income is the state pension “do not have to pay small amounts of tax”.
The full new state pension is very close to using up the £12,570 a year personal allowance, With the 4.8 percent rise in payments this April thanks to the triple lock, the full new rate will increase to £241.30 a week, or 12,547.60 a year.
This is just over £20 away from using up all the personal allowance, meaning the state pension would attract an income tax bill once it moves above this amount. But now ministers have announced they will bring in changes to prevent those who live on the state pension alone from paying the tax.
Chancellor Rachel Reeves told the Treasury Committee: “We are working on how that will work at the moment, but we have been clear that, if your only income is from the new state pension, you will not be subject to income tax during the course of this Parliament. We will set out details later this year on how that will happen.”
HMRC was asked for an update on the plans for the tax exemption policy. In a joint response from HM Treasury and HMRC, a Government spokesperson said: “Anyone whose only income is the full new or basic state pension without any increments will not pay income tax and we are committed to that over this Parliament.
“By keeping the triple lock, 12 million pensioners will see their income rise by up to £470 this year, and they continue to benefit from the highest personal allowance in the G7.”
The Treasury said it will set out more details about the new tax policy “in due course”. The Treasury Committee asked senior officials from HMRC in January 2026 about how the change would be enacted.
Cerys McDonald, director of Individuals Policy at HMRC, told the MPs that new legislation would need to be put in place to make the change. She said: “We would expect this to go through the next finance bill in the Autumn but we have mobilised a project team already in anticipation of having to make this change.
“The mitigation that we would normally use to recover this tax is simple assessment, normally we wouldn’t be processing that for 2027/2028 until after the 2028 tax year, so we’ve got a decent run in here.”
You can check how much state pension you are on track to receive through the Government website, using the state pension forecast tool. You typically need to have paid 35 years of National Insurance contributions to qualify for the full new state pension.
