Rachel Reeves, in a discussion with Martin Lewis, has verified that individuals relying solely on the state pension as their income will be exempt from paying taxes. The Chancellor, in the recent Budget, announced a 4.8% increase in the state pension, bringing the full new state pension to £241.30 per week (£12,547.60 annually) starting April 2026, just below the £12,570 personal allowance threshold for tax payment.

Concerns were raised by analysts that millions of pensioners dependent on the state pension might face taxation as the pension rises again in April 2027. The state pension sees annual increments following the triple lock mechanism. The Chancellor assured that individuals receiving only the basic or new state pension would not be subjected to tax via Simple Assessment.

Despite the state pension nearing the tax threshold, Rachel Reeves emphasized during an interview with Martin Lewis that in the current parliamentary term, no tax would be levied on the state pension. However, she refrained from committing to future tax implications beyond this term. Martin Lewis indicated that from 2027, tax would apply to the full new state pension as it surpasses the tax-free allowance.

The triple lock system ensures that the state pension adjusts annually based on the highest growth rate among earnings, inflation, or a minimum of 2.5%. With wage growth from May to July reaching 4.8%, this increment is being applied to the state pension for April 2026. Further details on how tax exemptions for state pension recipients will be implemented were not disclosed at the time.