HMRC confirms 290,000 Brits will see State Pension change in £3.5m move
HM Revenue & Customs (HMRC) has confirmed that nearly 300,000 pensioners will be exempt from paying income tax altogether, as part of a £3.5million system overhaul designed to stop State Pensioners from being dragged into the tax net. Under new Treasury plans unveiled in an official policy paper, hundreds of thousands of older Britons will benefit from a newly created Pension Tax Allowance (PTA), preventing routine annual pension increases from landing them with unexpected tax demands. The measure comes into effect from April 6, 2027 and covers the tax years running through to 2029/30. In total, around 500,000 pensioners will see their tax bills cut in the first year alone, with 290,000 freed from paying income tax entirely.
TL;DR
- Nearly 300,000 pensioners will be exempt from income tax under new Treasury plans.
- A new Pension Tax Allowance (PTA) will prevent annual pension increases from leading to unexpected tax demands.
- The measure takes effect from April 6, 2027, and will benefit around 500,000 pensioners in the first year.
- By 2029/30, an estimated 600,000 pensioners will be out of the tax system, with one million seeing reduced liability.
- Eligibility is based on total income, not solely on State Pension payments.
- The relief will be automatically applied, with HMRC investing £3.5 million in IT upgrades.
- Over 200,000 pensioners will avoid receiving 'Simple Assessment' tax bills.