The government will introduce measures in the Budget to prevent low-income pensioners from paying income tax on their state pension after it increases in April, Healey has announced. The changes are intended to ensure that the full, flat-rate state pension does not become liable for income tax as a result of the rise.
Officials said adjustments will be set out in the upcoming Budget to shield those on lower incomes, although detailed measures have not yet been published. The move responds to concerns that an increase in the state pension could push recipients into a tax position where part or all of the payment attracts income tax.
The state pension is a flat-rate benefit paid to eligible pensioners; the planned April increase prompted calls from campaigners and some policymakers to ensure the rise does not inadvertently leave recipients worse off after tax. The Budget action signals the government’s intention to address those risks directly rather than leaving any tax liability to fall on pensioners.
Lawmakers and advocacy groups are likely to scrutinise the Budget provisions to confirm they are sufficient to protect those on the lowest incomes. Further details, including how the changes will be implemented and which groups will be eligible for full protection, are expected to be set out when the Budget is published.