Kim
A new online petition is urging the UK Government to raise the Personal Allowance—the annual tax-free income threshold—from £12,570 to at least £25,000 for pensioners.
The move comes as disability pensioners increasingly face income tax due to a freeze on allowances and rising State Pension payments under the Triple Lock system. Could this change help you pay less tax in retirement?
Why Pensioners Are Calling for a £25,000 Allowance
- The Personal Allowance is frozen at £12,570 until April 2028 despite inflation.
- The New State Pension now stands at £11,973 (2025/26), pushing many pensioners over the tax threshold.
- Rising pension incomes mean more pensioners are paying income tax, even without other earnings.
This petition, launched on the Government petitions platform, gained traction quickly. A successful outcome could result in Government debate and potential legislative change.
How Many Pensioners Face Tax Under the Current Rules
| Metric | Statistic |
|---|---|
| State Pension-age population | ~13 million |
| Pensioners paying tax (2025/26) | ~8.7 million |
| Increase from 2024/25 | +420,000 |
| Increase from 2015/16 | +1.85 million |
| Petition signatures so far | ~800 |
| Potential eligibility threshold | Personal Allowance up to £25,000 |
Impact of Frozen Allowances & Triple Lock
- Fiscal drag: As pensions rise but Personal Allowance remains static, more people slip into taxable income brackets.
- In 2025/26, a full New State Pension (£11,973) alone could tip many over the tax-free limit if combined with other income.
- By April 2027/28, the triple lock could raise State Pension to around £12,579, exceeding the tax-free threshold—even without additional income.
- Many pensioners now face unexpected tax charges despite low income, especially those with modest private pensions or savings income.
Why £25,000 Is the Chosen Figure
- Petition supporters argue that £25,000 reflects a tax-free allowance more aligned with current cost-of-living pressures.
- It reflects fairness for older people who paid National Insurance contributions for years before retiring.
- Proponents believe this could shield elderly retirees from hidden tax and help maintain basic living standards.
Arguments From Both Sides
Supporters say:
- A higher allowance protects pensioners against rising tax bills caused by automatic pension uprating.
- It offers real relief to those living solely on State Pension or small private pensions.
- It respects the principle that pension income—paid via contributions—should remain largely tax-free.
Skeptics point out:
- Such a move could cost the Treasury tens of billions in lost revenue.
- It risks widening inequality by benefiting those with larger pension savings.
- Without targeting, it may fail to reach those most in need.
What Happens Next
- If the petition reaches 10,000 signatures, the Government must issue a formal written response.
- At 100,000 signatures, it may be considered for debate by the Petitions Committee.
- Meanwhile, public discussion is growing around fiscal drag, triple-lock impacts, and the need for reform.
Should You Support the Campaign?
If you:
- Are a pensioner or close to retirement,
- Have already crossed the £12,570 income threshold with your State Pension alone,
- Worry about rising income tax despite living on low earned income,
then backing this cause may help push the Government to reconsider pension tax policy.
Even current retirees with modest private income, savings or ISAs may be affected—especially from April 2026 onwards.
Action Steps for Pensioners
- Check your 2025/26 State Pension forecast to see if you exceed £12,570.
- Review any private pension or savings income that could push you into the taxable bracket.
- Consider signing the petition to raise awareness.
- Use GOV.UK tools to estimate your tax liability based on multiple income streams.
- Consult a financial adviser to explore tax allowances like Marriage Allowance or tax-efficient savings.
The push to raise the Personal Allowance to £25,000 for pensioners reflects growing concern over rising pensioner tax bills as earnings and pensions grow—but thresholds remain frozen.
With 8.7 million pensioners now paying income tax by 2025/26, supporters argue the change is urgently needed to avoid penalising older people, especially in retirement.
Whether the campaign will succeed depends on public support and political will. But for many retirees, it represents a tangible effort to protect pension income from further erosion by tax.
If you are affected—or expect to be soon—now is a good time to sign, share, and push for a fairer tax threshold in retirement.
FAQs
What is the State Pension amount in 2025/26?
The full New State Pension is £11,973 annually. Under the current Personal Allowance, this alone could mean tax liability by 2027/28.
How many pensioners currently pay income tax?
An estimated 8.7 million pensioners are projected to pay income tax in 2025/26—an increase of 420,000 compared to the previous year.
Will a £25,000 allowance help everyone?
Pensioners with low or no other income would benefit most. Those with modest private pensions or savings might still owe tax; but higher allowance reduces financial strain for millions.