Rachel Reeves deals huge tax blow to state pensioners - '3 years of pain'
Reach Daily Express December 22, 2025 03:39 AM

State pensioners are being "pushed into paying more tax" thanks to Chancellor Rachel Reeves, it is being claimed.

In her autumn Budget, the Chancellor extended the freeze on tax thresholds for another three years, meaning it will now be in place until 2031.

The triple lock has ensured that the state pension will rise, but with the personal allowance for income tax stuck at £12,570, state pensioners could soon be taxed on their payments.

Caroline Abrahams, charity director at Age UK, said the Government's freezing of tax thresholds will "drag more older people into paying income tax, including some on low and modest incomes who need all the help they can get to sustain a decent standard of living at a time when prices for essentials are constantly rising".

She added that the move is "deeply regrettable" because it will last for a full three years.

After the Budget, Ms Reeves settled some nerves when she confirmed that anyone relying solely on state pension income will not be taxed.

In an interview on ITV's The Martin Lewis Money Show Live, the Chancellor said a "simple workaround" will be implemented to stop state pensioners paying small amounts of tax.

She added, "If you just have a state pension, and you don't have any other pension, we are not going to make you fill in a tax return."

Former pensions minister Steve Webb said: "The Government has a clear presentation problem when the new state pension goes above the tax threshold in 2027.

"But millions of pensioners already get state pensions above the tax threshold, and nothing has so far been done for them. So there is a real risk that pensioners on the new system will be more favourably treated."

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