Chancellor Rachel Reeves is under renewed pressure over £12,570 limit ‘penalising the poorest’
A new campaign has started to try to convince Chancellor Rachel Reeves to increase the frozen income tax allowance for state pensioners. Currently anyone earning more than £12,570 is liable for income tax – and the full new state pension is expected to go through that barrier in 2027.
The tax threshold has been frozen since 2021 – and last Budget Ms Reeves announced it would be extended to 2031. A new petition has been launched on the parliament website calling for this to be raised to £14,000 for all Brits – to specifically help state pensioners.
The petition from Geoffrey Lawson said: “Raise the income tax personal allowance from £12,570 to £14,000 to cover the State Pension. This will put all State pensioners, including older pensioners who have paid into SERPS or the State second pension, on an equal footing until the end of this Parliament.
“We believe the Chancellor’s proposals that only those receiving the new State Pension will not face additional tax demands because of the Triple Lock are flawed in that they favour pensioners retiring since 2016 with the benefit of the New state pension and thus create an unfair system. We feel that older pensioners who in the past have paid into SERPS or the second state pension will be discriminated against by the Chancellor’s proposals.”
Pressure is growing on Ms Reeves on tax thresholds – this week a debate took place in the Commons because a petition soared to 120,000 signatures. Anger is growing over the tax threshold freeze Freezing income tax thresholds forces millions of low-income workers to pay income tax or higher rates as wages rise. The Institute for Fiscal Studies (IFS) has warned that this “fiscal drag” hits the lowest paid hardest, dragging minimum wage earners and pensioners into the tax net and significantly increasing their tax bills.
At this week’s debate the government responded to the petition calling for a reform that would double the UK state pension tax threshold from its current level of £12,570 to £25,140. The Government has officially ruled out doubling the personal tax allowance for state pensioners, following a Westminster Hall debate sparked by an e-petition with over 120,000 signatures
During the debate on June 15, 2026, cross-party MPs raised concerns that rising state pensions, protected by the triple lock, combined with frozen personal tax thresholds, are dragging thousands of older people into paying income tax. Conservative MP John Lamont, who opened the debate, highlighted that dealing with unexpected tax bills from HM Revenue and Customs or being forced to complete self-assessment forms can be “both distressing and deeply worrying for those hard-pressed pensioners”
The petition, created by Tim Mason, was brought forward because many pensioners who worked hard and saved throughout their lives are finding their relatively small private or occupational pensions being heavily taxed once they begin receiving the state pension
Tory Mr Lamont said: “There are growing concerns that increasing numbers of pensioners are finding themselves liable to pay tax on their pensions. That is because the triple lock has increased the state pension year on year, while personal tax allowances have remained frozen. As a result, some pensioners are required to complete a self-assessment tax return, while others receive unexpected tax bills from HM Revenue and Customs.
“Many pensioners do not have substantial incomes and have limited savings; it can therefore be both distressing and deeply worrying for those hard-pressed pensioners to deal with tax demands. As the organisation Silver Voices has highlighted, taxing the state pension risks undermining the very principle of a retirement safety net, which was designed to ensure that people can afford life’s basic necessities in retirement.”
Conservative MP Mark Garnier directly challenged the Government on the petition’s core aim, asking if the minister was willing to raise the tax-free threshold for pensioners to £25,140—effectively maintaining it at 200% of a working person’s allowance. Talking about the Chancellor, he said: “After promising not to extend the freeze—something we would have supported —she went back on her word and chose not to protect hard-working people. ”That matters to pensioners, because the state pension will soon rise above the income tax threshold due to the triple lock, which we all agree is a good thing to remedy the ills that happened when the Toggle showing location ofColumn 265WHstate pension fell to, I think, about 13% or 14% of average earnings. That means that pensioners will now have to start paying income tax.
“The Government have proposed that basic-rate state pensioners will not have to fill in a tax return, although this seems to be a specific sort of form-filling break for the over-67s rather than an actual hiking of the allowance.
“I look forward to hearing from the Minister whether he is willing to raise the tax-free threshold, as identified in this petition, from £12,500 or thereabouts to £25,140, and will then maintain it at 200% of the working person’s tax-free threshold.”
Pensions Minister Torsten Bell delivered a clear rejection to campaigners, stating unequivocally that “no political party will deliver a doubling of the personal allowance for pensioners”. He explained that such a drastic increase would come at a fiscal cost of “several billion pounds each year,” which he argued is inconsistent with the Government’s two main priorities: raising the basic state pension and rescuing the NHS
Mr Bell defended the Government’s position by noting that the tax system has always treated pensions as taxable income, pointing out that over 80% of pensioners were already paying income tax by the end of the previous Conservative administration. He added that extending the freeze on the personal allowance was a necessary choice to put public finances on a sustainable footing, stressing that the UK’s tax system remains progressive and “those who have more contribute more”
He said: “The yearly amount of the full new state pension is projected to rise by about £2,100 over this Parliament, reflecting our manifesto commitment to uprate via the triple lock throughout this Parliament.”
While the £25,140 threshold was dismissed, Bell did confirm some upcoming administrative relief for older taxpayers. He announced that the forthcoming Finance Bill will include specific measures to ease the administrative burden on pensioners, ensuring they will not have to deal with the “simple assessment” process to pay small amounts of tax from 2027-28
“Members will know that the basic and the new state pensions increased by 4.8% in April; I think it is a matter of cross-party consensus that that is a good thing. It will boost pensioner incomes by up to £575 a year. We are also protecting the poorest pensioners with a 4.8% increase in the pension credit minimum guarantee.”
