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Part of the special edition: Autumn Budget 2026: what it means for you

What it means for youPensions & retirement

Budget 2026 for pensioners: the new Pension Tax Allowance, the Triple Lock change and what else affects you

From April 2027 a new Pension Tax Allowance means pensioners with income up to about the full new State Pension will not pay small amounts of income tax. The Triple Lock is set to change from the next Parliament.

Published 28 October 2026Last checked 28 October 2026UK-wideFrom HM Treasury and HMRC

A pair of reading glasses resting on a letter beside a teapot and a small brass padlock that has been opened, on a sunny kitchen windowsill.

Illustration generated with AI

What's happening

The full new State Pension is close to the £12,570 tax-free Personal Allowance, so some pensioners with little other income have started to owe small amounts of income tax. From 6 April 2027 a new Pension Tax Allowance removes that tax for pensioners whose total income is up to £13,037, and reduces it for incomes up to £13,319. It runs for three tax years, to April 2030. Separately, the government plans to adjust the Triple Lock from the next Parliament so that the State Pension tracks earnings over time. Unused pension pots will count towards inheritance tax from 6 April 2027, as announced before.

The question: Will I pay tax on my State Pension, and what is happening to the Triple Lock?

The policy

Announced by
HM Treasury
Announced on
28 October 2026
Stage
announced
Takes effect
6 April 2027 (Pension Tax Allowance and pensions inheritance tax); next Parliament (Triple Lock)
  • Pensioner with total income £13,000: Owes no income tax instead of £86

    (£13,000 − £12,570) × 20% = £86, fully covered (illustrative calc)

  • Pensioner with total income £13,200: Owes about £87 instead of £126

    £93.40 − (£163 ÷ 3) ≈ £39 allowance (illustrative calc)

  • Pensioner with total income £15,000: No change from the allowance

    Above £13,319

This applies to you if…

  • You receive the State Pension
  • Your total taxable income in a tax year is above £12,570 but no more than £13,319
  • The tax year is 2027 to 2028, 2028 to 2029 or 2029 to 2030

Not for you if…

  • Pensioners with total income of £13,319 or more, who get no Pension Tax Allowance
  • Pensioners with income below £12,570, who pay no income tax anyway
  • People below State Pension age

What it's worth

What it's worth: From a few pounds to about £93 a year, depending on total income

HMRC Annex A: full allowance below £13,037, withdrawn at £1 for every £3 above that, gone at £13,319. Value is the basic rate (20%) applied to the gap between the full new State Pension and the Personal Allowance (OOTLAR 1.4).

Tax year 2027 to 2028

Illustrative calc: the most the allowance is worth

  1. HMRC's table sets the threshold for the full allowance at £13,037.
  2. The Personal Allowance is £12,570. £13,037 minus £12,570 is £467.
  3. 20% of £467 is £93.40.
  4. So a pensioner with total income of £13,000 would owe £86 without the allowance (20% of £430), and nothing with it.

Income tax of up to about £93 a year removed

Illustrative calc. HMRC has not yet published worked examples of how the allowance is applied. Figures rounded.

How to do it

  1. 1

    Check your total income

    Add your State Pension, any workplace or personal pension, and taxable savings interest. The Pension Tax Allowance is based on total income.

    Takes about 15 minutes

  2. 2

    Keep any Simple Assessment letters

    If HMRC has written to you about tax on your State Pension for an earlier year, the new allowance only applies from 6 April 2027.

    Takes about 5 minutes

  3. 3

    Check you get everything you are due

    Pension Credit tops up low incomes and can unlock other help. The Budget does not change it, but many people who qualify do not claim.

    Takes about 20 minutes

The catches

It is a narrow band

The allowance only helps if your total income is between £12,570 and £13,319 in 2027 to 2028. Above £13,037 it shrinks by £1 for every £3 of extra income.

It lasts three years

HMRC says it is available in 2027 to 2028, 2028 to 2029 and 2029 to 2030.

Savings tax rises too

From 6 April 2027 tax on savings interest above your allowances rises to 24% for basic-rate taxpayers. Pensioners with savings outside ISAs could be affected.

April 2027 State Pension amount

The Budget documents we checked do not state the new State Pension rate for April 2027. The Department for Work and Pensions normally publishes benefit and pension rates separately.

Illustrative example

Two pensioners with slightly different incomes

Joan has the full new State Pension and a tiny workplace pension, giving a total income of £13,000 in 2027 to 2028. Her neighbour Pat has a total income of £13,200.

  1. Joan's income is £430 above the Personal Allowance, so without the new allowance she would owe £86. She is under £13,037, so the full allowance applies and she owes nothing.
  2. Pat's income is £630 above the Personal Allowance, so tax would be £126. Pat is £163 over £13,037, so the allowance is cut by about £54, to about £39.
  3. Pat owes about £87 instead of £126.

Joan pays no income tax. Pat pays about £39 less

Illustrative calc. Joan and Pat are made up. Figures rounded.

Common misreadings

You might hear: The State Pension is now tax-free for everyone.

Actually: The allowance only removes or reduces tax for total incomes up to £13,319, and only from 2027 to 2028 to 2029 to 2030.

You might hear: The Triple Lock is being scrapped now.

Actually: The Budget says the Triple Lock will be adjusted from the next Parliament, so the State Pension tracks earnings over time. It says the State Pension will still rise every year.

You might hear: The State Pension will be £13,036 a year from April 2027.

Actually: This figure was reported before the Budget. The Budget documents we checked do not confirm the April 2027 rate.

Where the UK nations differ

UK-wide
The Pension Tax Allowance and State Pension rules apply across the UK. Income tax rates for Scottish taxpayers are set by the Scottish Parliament, and the Welsh rates by the Senedd.
England
The Budget links the Triple Lock change to free personal care and a National Care Service in England.

What you could do

  1. have total income just above £12,570 in retirement

    Expect the Pension Tax Allowance to reduce or remove your income tax from 6 April 2027.

  2. are a pensioner with savings outside an ISA

    Check whether your interest is above your Personal Savings Allowance before tax on savings rises in April 2027.

    By 2027-04-05

  3. have a pension pot you expect to leave to family

    Note that most unused pension funds and death benefits come within inheritance tax from 6 April 2027.

Timeline

  1. 28 October 2026

    Budget 2026

    Pension Tax Allowance confirmed. Adjusted Triple Lock announced for the next Parliament.

  2. 6 April 2027

    Pension Tax Allowance starts

    Applies in 2027 to 2028, 2028 to 2029 and 2029 to 2030.

  3. 6 April 2027

    Pensions and inheritance tax

    Most unused pension funds and death benefits come within the value of an estate.

  4. 5 April 2030

    Pension Tax Allowance ends

    Last day of the three tax years it covers.

The detail

The rules

  • Pension Tax Allowance: full allowance where income is below £13,037; withdrawn at £1 for every £3 above; fully removed at £13,319 (Annex A, 2027 to 2028).
  • Value: basic rate (20%) applied to the difference between the full new State Pension and the Personal Allowance (OOTLAR 1.4).
  • Personal Allowance £12,570 in 2026 to 2027 and 2027 to 2028; reduced by £1 for every £2 of income over £100,000.
  • Blind Person's Allowance £3,370 in 2027 to 2028. Married Couple's Allowance maximum £12,110 (for those born before 6 April 1935).
  • Pension annual allowance £60,000; Money Purchase Annual Allowance £10,000 in both years.
  • Adjusted Triple Lock from the next Parliament; Treasury estimates it reduces State Pension spending by £15 billion a year by the late 2030s (Budget 2026, 2.2).
  • The Budget also refers to capping the amount of pension contributions that can be salary sacrificed, a previous decision. No new figure was given in the parts we checked.

References

  • OOTLAR 1.4: Pension Tax Allowance design and dates.
  • Budget 2026, 4.5: Pension Tax Allowance from April 2027.
  • Budget 2026, 2.2 and executive summary: Adjusted Triple Lock, free personal care and a National Care Service in England.
  • OOTLAR 1.27: Unused pension funds within inheritance tax from 6 April 2027.

Documents

Words explained

Triple Lock
The current promise to raise the State Pension each year by the highest of earnings growth, inflation or 2.5%.
Simple Assessment
A tax bill HMRC sends you by letter. HMRC says the new allowance removes the need for some pensioners to pay small amounts of tax this way.
Personal Allowance
The income you can have each year before paying income tax, £12,570.
Total income
All your taxable income added together, such as pensions, earnings and savings interest.

In short

If your retirement income is just over £12,570, the new Pension Tax Allowance should remove or cut your income tax from April 2027 for three years. The Triple Lock is set to change in the next Parliament, not now. Unused pension pots come within inheritance tax from April 2027.

Related dates

  • 21 Dec Winter Fuel Payment opt-out for 2027 to 2028 opensChange · in 53 days
  • 27 Jan Chase a missing Winter Fuel PaymentDeadline · in 90 days
  • 31 Mar Winter Fuel Payment claim deadline (winter 2026 to 2027)Deadline · in 153 days
  • 6 Apr Pension Tax Allowance startsChange · in 159 days
  • 6 Apr Unused pensions come within inheritance taxChange · in 159 days
See the money calendar

Sources

  1. Budget 2026 (HTML), HM Treasury (2026-10-28)
  2. Budget 2026: Overview of tax legislation and rates (OOTLAR), HMRC (2026-10-28)
  3. OOTLAR Annex A: rates and allowances, HMRC (2026-10-28)
  4. Impact on households: distributional analysis to accompany Budget 2026, HM Treasury (2026-10-28)
  5. Inheritance Tax on unused pension funds and death benefits, HMRC
  6. Pension Credit, GOV.UK

This is guidance, not regulated financial advice. Check figures against the linked official source before you act. Written with AI assistance and checked against primary sources. How Kitty works. For free, impartial help, try MoneyHelper or Citizens Advice.