John Healey’s about to hit state pensioners over the head – 10m pay income tax from April

The number of pensioners paying tax has already soared. Around 9.6 million state pensioners are paying income tax in 2026/27, a record high. That’s an increase of a staggering three million, since the Tories introduced the freeze on income tax thresholds in 2021/22. Worse, more are paying at higher rates. The number paying 40% or more has also doubled in five years, from around half a million to more than a million.

This is the result of freezing the tax-free personal allowance at £12,570 while continuing to increase the state pension each year under the popular triple lock mechanism. More and more retirees are being dragged into the tax net without the Government having to announce a single new tax. New PM Andy Burnham originally hinted that he might halt the freeze. Then he looked at the sums and never mentioned it again.

The full new state pension is currently £12,547 a year, leaving just £22 of the £12,570 personal allowance untouched. From April 2027, the Government Actuary expects the triple lock to increase the state pension by 3.4%, lifting the full new state pension to roughly £12,974. That’s around £404 above the tax-free threshold. So even somebody who has worked all their life and receives nothing more than the full new State Pension would technically have taxable income. At 20%, that’s around £81 a year.

Former chancellor Rachel Reeves pledged that pensioners whose only income is the basic or new state pension, without increments, won’t have to pay these small amounts of tax. That wasn’t anywhere near as generous as it looks. Consultancy LCP estimates this protection will help just 800,000 people, around one in 17 pensioners.

It means pensioners only need to earn a modest extra income to be pushed into paying tax. A private pension certainly will do it. A part-time job certainly will. Savings interest can also become taxable once the relevant allowances are exhausted.

Many pensioners on the old basic state pension will pay tax anyway because they have built up additional State Pension, including SERPS and the State Second Pension, or S2P. Those payments are taxable income today. They will remain so.

The full basic state pension is currently £9,614 a year, well below the £12,570 allowance. But add state pension increments plus private pension and the tax demands soon land.

Labour chancellor John Healey is claiming to protect pensioners from tax while steadily pulling even more of them into the net.

Today, Robert Jenrick exclusively told the Daily Express that a Reform government would raise the personal allowance from £12,570 to £15,000. That means retirees would keep every penny of their state pension under a Reform government. Jenrick says that is worth around £1,000 a year to an average working couple. And crucially it will ensure that the State Pension itself is not taxed. It will lift 2.9 million people out of income tax altogether.

By contrast, Labour is dragging more low-income pensioners into the tax net while only bailing out a small minority. After a lifetime of paying National Insurance, that’s a pretty miserable reward.