Government promises state pension tax exemption but offers no detail
The government says pensioners who rely only on the state pension will not pay income tax, but it has not explained how that will work as payments are set to rise above the personal allowance
The Full Story
A plain summary built from the channels that reported this story.
The government has promised that pensioners whose only income is the state pension will not pay income tax, even as state payments rise above the personal allowance. Ministers have not set out how the system will work in practice. The promise comes as the full new state pension is expected to rise above £13,000.
The new state pension is paid to around 5 million people and applies to those who reach state pension age after April 2016. It is currently worth £12,548 a year, just below the personal tax threshold, the amount a person can earn before paying income tax. Pensioners whose income is topped up by a private pension or part-time work above that threshold already pay tax.
State pensions rise each year under the triple lock. The increase is the highest of 2.5%, inflation as measured in September, or average annual wage growth. Based on existing data, the increase this year is expected to be 3.9%, in line with average annual wages. That figure is expected to be confirmed at the Budget. If confirmed, the full new state pension would go above £13,000, enough to trigger income tax on part of it even for someone whose only income is the state pension.
The government has promised that will not happen, but it has not explained the mechanism. Independent Age said older people on low incomes are calling its advisers, worried they will have to fill in forms for HMRC. The charity said its advisers cannot give much advice because the situation is unclear.
Several options have been suggested:
- The government could raise the personal tax threshold for everyone of all ages.
- It could use data it already holds to take the administrative onus off older people and collect the tax it needs.
- It could simplify the system. Independent Age said the social security system is very complicated and the government could do more to make it simpler for people who need the money.
Pensions Minister Torsten Bell said pensioners would not have the administrative burden of paying small amounts of tax this parliament. He said more details on how that will be delivered will be set out at the Budget by the Chancellor. The Budget is due on Wednesday 28 October, when further information should become available.
On screen
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Key Claims
Claims reported during this story's coverage, grouped by how many channels reported each one. Select a dot to see the source excerpt.
| Claim |  |
|---|---|
| Only on one channel | |
| The government promised that people whose only income is the state pension will not pay tax on it, while the pensions minister said pensioners will not face administrative burdens for small tax payments this parliament. | |
| The state pension increase this year is expected to be 3.9%, matching average annual wage growth. | |
Channel Perspectives
What each channel focused on, with key quotes.
BBC ONE West led on the government's promise but kept the focus on the unanswered practical questions. It explained who is affected, set out the expected 3.9% rise and the £13,000 threshold problem, and gave airtime to Independent Age's concerns about forms and complexity. It also noted the Pensions Minister's claim that pensioners will not face an administrative burden, with details promised at the Budget.
- “The government's promising that pensioners who rely solely on the state pension won't pay income tax even as state payments rise above the personal allowance.”
- “The government haven't given any clear information on what this is actually going to mean in practice for the people who do end up paying tax.”
- “pensioners quote will not have the administrative burden of paying small amounts of tax this parliament.”
Broadcast Timeline
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