State pension £25,140 tax threshold plan surges as Treasury responds | Personal Finance | Finance
Chancellor Rachel Reeves is being pressured over tax thresholds for pensioners (Image: Bloomberg via Getty Images)
Support has surged for a campaign aiming to pressure Chancellor Rachel Reeves into doubling the income tax threshold for state pensioners. Currently, the initial threshold allowing people to earn without paying tax stands at £12,570.
State pensions are projected to exceed that limit in 2027 due to the triple lock, according to forecasts. Ms Reeves has indicated that those receiving only the full new state pension will not face tax demands – however, millions more will be pulled into paying additional tax.
The campaign is urging that pensioners be granted a separate tax code permitting them to earn £25,140 before paying tax. Should it reach 100,000 signatures, it will guarantee a debate in Parliament where Ms Reeves’ Treasury will be required to defend its stance and provide updates on future plans.
In the last 7 days, it has gained more than 25,000 signatures, bringing it to 73,703, meaning it is three-quarters of the way towards securing the debate. The proposal recommends that pensioners should be allowed to earn £25,140 before paying tax – double the £12,570 personal tax allowance.
The Treasury has provided a response to the campaign, and should it get to 100,000 signatories, it will prompt a parliamentary debate where Treasury officials would need to set out their plans and defend the existing policy. The petition received an official response recently – shortly after Chancellor Rachel Reeves extended the threshold freeze until 2031 – which means those receiving the full new State Pension will face tax liabilities from 2027, assuming the triple lock system, guaranteeing annual increases of at least 2.5 per cent, remains intact.
The petition, accessible here, has amassed 54,304 signatures – triggering an official Treasury response. Timothy Hugh Mason, who launched the initiative, declared: “We want the government to introduce a new tax code for state pensioners, set at double the basic threshold. If this was implemented, pensioners would receive a higher tax-exempt limit, but wealthier pensioners would still pay tax.
“We think that people with small private or workplace pensions are currently being taxed unfairly.”
The Treasury has confirmed that decisions regarding those only receiving the full new state pension and the £12,570 personal tax allowance will be made in 2026.
During her Budget address in November, Ms Reeves pledged that those exclusively receiving the full new state pension would be exempt from taxation or the requirement to complete tax returns, though she didn’t specify how this would be achieved. The Treasury has now revealed it will devise a strategy in 2026.
In its official statement, the Government said: “As announced at the Budget, the government will ease the administrative burden for pensioners whose sole income is the basic or new State Pension without any increments so that they do not have to pay small amounts of tax via Simple Assessment from 2027-28, if the new or basic State Pension exceeds the Personal Allowance from that point. The government is exploring the best way to achieve this and will set out more detail next year.”
In response to the proposal to raise the minimum tax threshold for pensioners to £25,140, the Treasury declared: “The State Pension is the foundation of support for pensioners. The Government is committed to a fair tax system but doubling the Personal Allowance for pensioners would be untargeted and costly.”
The department continued: “The State Pension is the foundation of support available to pensioners. The government is committed to the Triple Lock – one of the most generous State Pension uprating mechanisms in the world – for the duration of this Parliament. This will increase the basic and new State Pension by 4.8% next April, boosting pensioner incomes by up to £575 a year and strengthening retirement security.”
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Officials further stated: “The Personal Allowance is already the highest amongst G7 countries. Doubling this allowance for all pensioners would be costly and untargeted – disproportionately benefiting higher-income pensioners.”
The triple lock mechanism is set to increase the full new State Pension from £230.25 to £241.30 weekly (£12,548 annually) from next year, placing it just under the threshold.
Personal finance guru Martin Lewis has emphasised that the complete new State Pension amounts to £12,558 whilst the personal allowance stays at £12,570 until 2031 – representing the amount individuals can earn annually before becoming liable for tax.
Mr Lewis has observed that from April 2026, the new state pension will fall £30 short of the allowance. He explained: “So anyone who’s got any other form of earnings – well, you’re going to go over it if you’ve got the full new state pension, you will have to pay tax.
“But from 2027 because we know the state pension has to rise by a minimum 2.5 per cent because of the triple lock here’s a projection. The minimum it could rise because of the triple lock 2027 it’s going to be about £12,861, £300 more than the tax free allowance as that’s staying stable and it will go more and more and more.”
To view and sign up to the petition click here.








