Pressure growing on Chancellor Rachel Reeves as debate confirmed over plan to double allowance in UK
Pressure is growing on Rachel Reeves over pensioner tax thresholds (Image: Getty)
A huge update has been given to pensioners hoping Chancellor Rachel Reeves will double the income tax threshold for state pensioners. A now closed petition on the Parliament website surged to 119,206 signatures – and today officials have announced it will be debated by MPs on June 15 – meaning pressure will grow on Ms Reeves as Treasury ministers will be forced to lay out policy.
Currently, the personal allowance sits at £12,570 before individuals are liable for income tax. Projections indicate that by 2027, the state pension will surpass this figure as a result of the triple lock mechanism. While Ms Reeves has suggested that those receiving only the full new state pension will not face any tax liability, many others risk being dragged into paying additional tax.
The petition calls for pensioners to be assigned a separate tax code, allowing them to earn up to £25,140 tax-free. The parliamentary debate means Ms Reeves’ Treasury will be obliged to defend its position and provide clarity on its plans going forward. The petition proposes that pensioners should benefit from a £25,140 earnings threshold before becoming liable for tax — double the current £12,570 personal allowance.
During her second Budget, the Chancellor unveiled tax rises totalling £26 billion across a range of sectors, described at the time as a “smorgasbord” approach designed to create additional fiscal headroom for her spending and borrowing plans.
Among the measures was the decision to maintain frozen income tax thresholds, despite widespread speculation that the main rate could rise for the first time in decades. This kept the basic personal tax allowance at £12,570 until 2031, a move that could have significant implications for state pensioners.
The petition says: “Introduce new tax code for state pensioners with double the personal allowance. We want the government to introduce a new tax code for state pensioners, set at double the basic threshold. If this was implemented, pensioners would receive a higher tax-exempt limit, but wealthier pensioners would still pay tax.
“We think that people with small private or workplace pensions are currently being taxed unfairly.
The Treasury has responded to the petition after it got past 10,000 signups. It said: “The State Pension is the foundation of support for pensioners. The Government is committed to a fair tax system but doubling the Personal Allowance for pensioners would be untargeted and costly.
“The State Pension is the foundation of support available to pensioners. The government is committed to the Triple Lock – one of the most generous State Pension uprating mechanisms in the world – for the duration of this Parliament. This will increase the basic and new State Pension by 4.8% next April, boosting pensioner incomes by up to £575 a year and strengthening retirement security.
“The Personal Allowance is already the highest amongst G7 countries. Doubling this allowance for all pensioners would be costly and untargeted – disproportionately benefiting higher-income pensioners.
“As announced at the Budget, the government will ease the administrative burden for pensioners whose sole income is the basic or new State Pension without any increments so that they do not have to pay small amounts of tax via Simple Assessment from 2027-28, if the new or basic State Pension exceeds the Personal Allowance from that point. The government is exploring the best way to achieve this and will set out more detail next year [2026].”
When delivering her Budget speech in November, Ms Reeves promised that individuals receiving the full new state pension exclusively would be protected from taxation or the need to complete tax returns, though she didn’t specify how this would be accomplished. The Treasury has now disclosed it will formulate proposals in 2026.
To view the petition, click here.