In a revelation that left money expert Martin Lewis visibly shocked, Chancellor Rachel Reeves has confirmed that state pensioners with no other source of income will not have to pay any tax on their payments.
A Surprise Announcement on Live TV
The significant clarification came during an interview with the Chancellor, which was recorded for The Martin Lewis Money Show Live on ITV. Lewis was grilling Reeves ahead of his budget explainer special, seeking answers on the implications of the rising state pension.
The new flat-rate state pension, for those who reached pension age after April 2016, is set to increase to £241.30 per week, or £12,547.60 annually. This figure is just £22.40 below the current personal tax allowance of £12,570, creating confusion for many pensioners.
"We Are Not Going To Make You Fill In A Tax Return"
When questioned by Lewis, Chancellor Reeves provided a definitive answer. "So if you just have a state pension, you don't have any other pension, you don't have any other income, we are not going to make you fill in a tax return of any type," she stated.
She further elaborated that individuals would also not be required to pay any tax on their state pensions if they had no other income at all. This assurance provides significant relief for pensioners who rely solely on the state pension.
However, Martin Lewis was quick to add a crucial clarification. He emphasised that if a pensioner has any other earnings, even as little as £50 from a private pension, they would be required to pay tax on earnings above the personal tax allowance.
Clarifying the Confusion
The announcement was prompted by a question from a viewer named Rebecca, who was concerned about her 85-year-old father living with dementia. She asked if his state pension, which now exceeds the personal allowance, would require him to complete a complex tax return.
Following the broadcast of the interview clip, the camera returned to a stunned Martin Lewis in the studio. "See the surprise on my face?" he said to the audience. He explained that while the Budget had initially stated pensioners would not need to do an assessment, the mainstream media had not picked up on the fact that this also meant no tax would be due.
"You've just heard the Chancellor there, haven't you?" Lewis continued. "If you are only on the new State Pension with no other income until the end of this Parliament, so at least three years, probably, you will not have to pay any tax, not you won't have to do an assessment, you won't have to pay any tax."
This direct confirmation from the Treasury offers clear and welcome guidance for millions of pensioners across the UK, ensuring they will not face an unexpected tax bill or administrative burden.
