Andy Burnham rule set to hit pensioners with small private pensions

详细摘要

Pensioners with small private pensions could still face Income Tax under Andy Burnham's new rules, despite extra protection for those on lower incomes.

Pensioners with small private pensions could still face Income Tax under new rules introduced by Andy Burnham's Government. The changes, announced by Chancellor John Healey in the Autumn Budget, are designed to stop people who rely on the State Pension from being dragged into paying tax as their payments rise. However, those receiving additional income from a private or workplace pension could find themselves in a different position.

From April 2027, the full new State Pension will rise by 3.9% to £13,036.40 a year, taking it above the standard £12,570 Personal Allowance. To prevent pensioners on the lowest incomes from facing a tax bill, the Government is introducing a new Pension Tax Allowance.

This will protect people whose total income does not exceed the full new State Pension, with additional relief gradually withdrawn for those earning slightly more. But pensioners receiving even a modest amount from a private pension could still end up paying tax if their total income exceeds the relevant thresholds.

The issue has raised concerns about whether people who saved for retirement could be treated differently from those relying entirely on the State Pension. Patrick Thomson, head of research, analysis and policy at Standard Life Centre for the Future of Retirement, previously warned that the protection could become more complicated as pension payments continue to rise.

He said: "What looks like a relatively simple solution could become more complicated over time as the state pension continues to rise against a frozen personal allowance." The new tax protection will run from April 6, 2027, until April 5, 2030, with the allowance rising alongside the State Pension.

Those whose income is only slightly above the full new State Pension will receive some relief, rather than losing the protection immediately. However, people with higher combined retirement incomes will continue to pay Income Tax under the usual rules.

The Government says the measure will prevent pensioners on…

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