Government rejects call to raise pensioners' tax-free allowance
Newsletter issue – February 2026
A petition asked the Government to create a new tax code for people over state pension age and raise their personal allowance to £25,140. It passed 34,000 signatures, triggering an official Government response.
The Treasury said the proposal is too expensive and rejected the idea, calling it "costly and untargeted." The Government argues that significantly increasing the allowance for all pensioners would not be a focused use of public funds.
More pensioners will pay tax in coming years due to the frozen personal allowance of £12,570 until 2031, and the Triple Lock increasing state pensions, meaning more retirees will cross the tax threshold. An estimated 420,000 additional pensioners will pay income tax in 2025/26 compared to the previous year.
The State pension is rising close to the tax threshold - from April 2026, the full new state pension will rise to £12,547.60, just £22.40 below the tax-free allowance. This narrow gap means many more pensioners will become taxpayers as pensions continue to rise.