Campaigners have called for a new tax code for pensioners
A petition has called for pensioners to have a different tax code (Image: Getty)
A Government update has been issued following calls to double the tax limit for pensioners. Petitioners have asked for a new tax code for retired people, allowing them a higher tax-free income.
Across the UK, State Pension recipients must currently pay income tax if their total income surpasses their personal tax allowance. For the majority, this threshold stands at £12,570 annually.
This permits people to collect £12,570 yearly from their pension without tax implications. The identical principle also applies to most people in work.
Nevertheless, earnings exceeding £12,570, whether from employment or State Pension, attract a 20 per cent tax rate on each pound above this threshold. These rates increase progressively when income or pension payments surpass £50,270 annually.
However, campaigners have asked that this threshold is doubled. In a petition made to Parliament, they said: “Introduce new tax code for state pensioners with double the personal allowance.
HM Treasury the Government said doubling the threshold would be “costly and untargeted” (Image: Getty)
“We want the Government to introduce a new tax code for state pensioners, set at double the basic threshold. If this was implemented, pensioners would receive a higher tax-exempt limit, but wealthier pensioners would still pay tax.”
Currently this petition has more than 31,000 signatures, surpassing the 10,000 mark which qualifies for a Government response.
If it reaches 100,000 signatures, the matter could be brought forward for discussion in the House of Commons. But in a written response from HM Treasury the Government said doubling the threshold would be “costly and untargeted”.
It said: “The State Pension is the foundation of support for pensioners. The Government is committed to a fair tax system but doubling the Personal Allowance for pensioners would be untargeted and costly.
“The State Pension is the foundation of support available to pensioners. The Government is committed to the Triple Lock – one of the most generous State Pension uprating mechanisms in the world – for the duration of this Parliament. This will increase the basic and new State Pension by 4.8% next April, boosting pensioner incomes by up to £575 a year and strengthening retirement security.
“The Personal Allowance is already the highest amongst G7 countries. Doubling this allowance for all pensioners would be costly and untargeted – disproportionately benefitting higher income pensioners.
“As announced at the Budget, the Government will ease the administrative burden for pensioners whose sole income is the basic or new State Pension without any increments so that they do not have to pay small amounts of tax via Simple Assessment from 2027-28, if the new or basic State Pension exceeds the Personal Allowance from that point. The Government is exploring the best way to achieve this and will set out more detail next year.”
Earlier this year a separate petition called for the State Pension to become entirely tax free. This was signed by 17,129 people, but HM Treasury said there were “no current plans to make the State Pension tax exempt”.
