Will You Pay Tax on Your State Pension From April 2027?
Two lines have been heading towards each other for five years. The State Pension goes up every April under the triple lock. The personal allowance has not moved since 2021. In April 2027 they cross, and the full new State Pension becomes bigger than the amount you can earn tax free. The government has promised that some people will not have to pay the resulting bill. Working out whether you are one of them is the hard part.
The State Pension has always been taxable
This is the bit that surprises people, so it is worth saying first. The State Pension has counted as taxable income since 1946. Nothing about that is changing.
What has kept most pensioners out of the tax net is simply that the payment was smaller than the personal allowance, the slice of income everyone gets tax free. If the State Pension is your only income and it comes in under that line, there is no tax to pay and usually nothing to do.
The other thing that has not changed is how the tax gets collected. The Department for Work and Pensions pays the State Pension without taking any tax off first. If you have a private pension too, HMRC adjusts your tax code so your pension provider deducts the right amount across your whole income. If you have no other PAYE income, HMRC instead sends a bill after the tax year ends, called a simple assessment. Hold on to that word, because the whole 2027 debate turns on it.
Why the two lines are crossing
The personal allowance reached £12,570 in 2021-22 and has been frozen there ever since. In the November 2025 Budget the freeze was extended by another three years, so it stays at £12,570 until April 2031.
Meanwhile the basic and new State Pension rise every April by the highest of earnings growth, inflation or 2.5%. That is the triple lock, and it has applied every year since 2011-12 apart from one suspension in 2022-23. Recent rises have been large: 10.1% in 2023-24, 8.5% in 2024-25, and 4.8% this year.
So one number climbs and the other sits still. The full new State Pension is now £241.30 a week, or £12,548 a year. That is £22 short of the allowance. One more triple lock rise of any size takes it over.
What April 2027 actually looks like
The 2027-28 rate is not confirmed yet, and anyone quoting it as settled is guessing. The triple lock needs two figures. The first is average earnings growth for May to July, which the Office for National Statistics published on 15 September 2026 at 3.9% for total pay. The second is September inflation, published on 21 October. The Department for Work and Pensions uses the revised earnings number from the October bulletin, and the rise is confirmed at the autumn Budget.
Unless September inflation comes in above 3.9%, earnings growth wins and sets the rise. Here is what that produces, using the current rate and rounding to the nearest 5p as the uprating rules do.
| Working it out | Figure |
|---|---|
| Full new State Pension now (2026-27) | £241.30 a week |
| Earnings growth, May to July 2026 | 3.9% |
| Likely rate from April 2027 | £250.70 a week |
| Over a 52-week year | £13,036 |
| Personal allowance | £12,570 |
| Slice above the allowance | £466 |
| Tax at the 20% basic rate | £93 |
So a person whose only income in the world is the full new State Pension would, without intervention, get a bill for about £93 some time after April 2028. Not a catastrophe, but an unexpected brown envelope for someone living on £250 a week, and it grows every year the freeze continues.
The consultancy LCP, whose pensions partner is the former pensions minister Steve Webb, modelled this in May 2026 using the Office for Budget Responsibility's assumptions of 3.7% then 2.5% twice. They got £88 for 2027-28, rising to £153 in 2028-29 and £220 in 2029-30. My £93 is slightly higher only because the actual earnings figure landed above the OBR's assumption. The direction is the same either way: the bill compounds.
The government's promise, and its small print
In the November 2025 Budget the Chancellor said the government would make sure "that people only in receipt of the basic or new State Pension do not have to pay small amounts of tax through Simple Assessment from April 2027". The Budget document added that it was still "exploring the best way to achieve this".
Ten months on, that is still where things stand. HMRC told the Treasury Select Committee in January 2026 that a project team had been mobilised and that any change would go through the Finance Bill in the autumn. Ministers have repeatedly said more detail will follow. None has been published.
The promise carries three words that do the real work: sole, basic or new, and without any increments.
What "without increments" rules out
An increment is anything paid on top of the standard rate. That includes protected payments carried over when the new system started in 2016, additional State Pension such as SERPS or State Second Pension, graduated retirement benefit, and the extra you get for having deferred your pension. Hold any of those and, on the wording so far, you are outside the concession even if your total income is identical to someone who qualifies.
How few people this actually covers
LCP worked through the DWP's own data to count the people left after each filter is applied. Starting from 5.043 million people on the new State Pension in August 2025:
- Take out those not taxed in the UK, and 4.75 million remain.
- Take out those with a protected payment, and 3.70 million remain.
- Take out those on less than about 92% of the full rate, who will not reach the allowance anyway, and 2.52 million remain.
- Take out the roughly 72% who have some private pension or investment income, and 0.71 million remain.
Rolled forward to 2027-28, LCP puts the number who benefit at around 0.82 million. Separately, none of the 7.7 million people on the old State Pension qualify on the wording published so far, because 6.6 million of them receive additional State Pension, and anyone on the old basic pension alone is nearly £3,000 below the allowance and was never at risk of a bill. LCP's summary is that just under one pensioner in sixteen benefits.
For scale, HMRC's own figures show 8.72 million people over State Pension age already paying income tax in 2025-26, up from 6.47 million in 2020-21.
The £1 cliff edge
Here is the part worth understanding before you do anything. The concession is all or nothing. It is not a deduction applied to the first £466 of everyone's income. Miss the eligibility test by a pound and you pay the full amount.
| Other taxable income | Total income | Tax due | Promise covers it? |
|---|---|---|---|
| £0 | £13,036 | £93 | Yes, if no increments |
| £1 | £13,037 | £93 | No |
| £250 | £13,286 | £143 | No |
| £1,000 | £14,036 | £293 | No |
| £3,000 | £16,036 | £693 | No |
These figures assume the April 2027 rate above and taxable non-savings income such as a private pension. Savings interest works differently, because the personal savings allowance and the starting rate for savings can cover a fair amount of it before any tax is due.
Two neighbours, both retired, both with exactly £13,036 of income.
Margaret gets it all from the new State Pension at the standard rate. Under the promise she pays nothing.
Alan reached pension age in 2014. His income is the old basic pension plus SERPS, adding up to the same £13,036. He is not "solely" on the basic pension, so he pays the £93. LCP flags this as a possible route to legal challenge.
There is a second oddity worth knowing if you were auto-enrolled into a workplace pension and have a small pot sitting untouched. Cash it in and you take 25% tax free and pay tax on the rest, which means you are no longer solely dependent on the State Pension, which means you lose the concession on top. As LCP puts it, that gives people a reason not to touch pots the government spent a decade encouraging them to build. If that is your situation, our guide to the 25% tax-free lump sum covers how the withdrawal itself is taxed.
What to do now
- Find out which State Pension you are on and whether it carries increments. Your annual uprating letter from the DWP breaks this down, or check your forecast on GOV.UK. Protected payments and SERPS are the two that catch people out.
- Do not make a decision on an unpublished rule. The detail is expected in the autumn Finance Bill. Rearranging your income around a concession whose wording nobody has seen is a poor trade for £93.
- If you get a simple assessment bill, check it rather than just paying it. HMRC builds these from DWP data, and the figure it holds for your pension is worth confirming against what you actually received.
- Expect this to grow. With the allowance frozen to 2031 and the triple lock continuing, the gap widens every April. The State Pension guide tracks the current rates and what drives them.
What will your own retirement income look like?
The State Pension is the floor, not the plan. See what your pot adds on top of it, and what that means before tax.
Try the calculator →Common questions
Will the State Pension be taxed in April 2027?
It is already taxable and always has been. What changes is that the full new State Pension is expected to rise above the personal allowance for the first time, so the pension on its own would produce a bill of roughly £93. The government has said people whose only income is the basic or new State Pension without increments will not have to pay it, but the mechanism has not been published.
How much tax would I pay on the State Pension alone?
On the 3.9% earnings figure published on 15 September 2026, the full new State Pension would be about £250.70 a week, or £13,036 a year. That is £466 above the £12,570 allowance, which is £93 at the 20% basic rate. The rate is not confirmed until the autumn.
Who is covered by the government's promise?
Only people whose sole income is the basic or new State Pension with no increments. LCP put that at roughly 0.82 million people, just under one pensioner in sixteen, once protected payments, part-rate pensions and any private pension or investment income are stripped out.
What happens if I have a small private pension as well?
On the wording so far you fall outside the concession completely, so you pay tax on the other income and on the State Pension slice above the allowance. The government has said more detail is coming, so recheck after the autumn Budget.
Is the personal allowance going up to keep pace?
No. It has been £12,570 since 2021-22 and the November 2025 Budget extended the freeze to April 2031. The State Pension rises each April while the allowance stays still, so the gap widens every year.
Sources
- State pension taxable since the Finance Act 1946; simple assessment process; Budget 2025 commitment and HMRC evidence to the Treasury Select Committee, 13 January 2026: House of Commons Library research briefing CBP-10250, Taxation of state pension, 22 July 2026.
- Personal allowance £12,570 frozen to April 2031: Budget 2025 (HC 1492), November 2025; HMRC policy paper, 26 November 2025.
- Chancellor's wording on simple assessment: Budget 2025 Red Book, para 4.167.
- Numbers in scope of the concession (0.82m), the £1 cliff edge, and the 2027-28 to 2029-30 projections of £88, £153 and £220: LCP, The tax treatment of state pensioners, May 2026.
- Average weekly earnings, total pay, May to July 2026 at 3.9%: Office for National Statistics, published 15 September 2026.
- Full new State Pension £241.30 a week for 2026-27: GOV.UK. Pensioners over State Pension age paying income tax: HMRC income tax statistics.
- The April 2027 rate and £93 tax figure are my own calculation from the ONS earnings figure, rounded to the nearest 5p as the uprating rules require. Correct as of September 2026, and not confirmed until the autumn Budget.
The Pension Sprout letter
One plain-English pension tip each month, plus what has changed in the rules. No spam, unsubscribe any time.
Sent via MailerLite. See our privacy policy.
This article is for general information only and does not constitute financial advice. The April 2027 State Pension rate is not confirmed until the autumn uprating announcement, and the government has not yet published how its simple assessment concession will work, so the figures here are illustrations based on the earnings data available in September 2026. Correct as of September 2026. For advice tailored to you, speak to a financial adviser regulated by the Financial Conduct Authority (FCA), or get free guidance from MoneyHelper.