Last updated: 14 October 2026
Has the government agreed to raise the tax-free allowance for pensioners?
No. The government has rejected calls for a separate, higher tax-free allowance for pensioners. Pensioners get the same Personal Allowance as everyone else, £12,570 for 2026/27, and it’s frozen until April 2031. Campaigners asked for a higher allowance because the full new State Pension (£241.30 a week, about £12,548 a year) is now close to the limit. The government’s position is that the State Pension is protected by the triple lock and that a single allowance keeps the system simple.
The background
Until 2016, people over 65 could get a higher “age-related allowance”. It was phased out when the Personal Allowance was raised for everyone. Since 2021, the allowance has been frozen, while the State Pension has risen by more than 30%.
| Allowance | 2026/27 |
| Personal Allowance | £12,570 |
| Allowance reduced by £1 for every £2 of income over | £100,000 |
| Marriage Allowance transfer | £1,260 |
| Blind Person’s Allowance | Check gov.uk for the current figure |
What this means for you
If you have income on top of the State Pension, for example a workplace pension, rent or savings interest, you will usually pay basic-rate tax on it. HMRC collects it through your tax code or a Simple Assessment.
Example
Peter, 72, receives a State Pension of £12,548 and a private pension of £9,000. He has £22 of his allowance left after the State Pension, so almost all of the £9,000 is taxed at 20%: about £1,796 a year. If a separate allowance had been introduced at, say, £15,000, his bill would have been around £1,310. That gap is why campaigners pushed for the change.
Allowances that can still help
- Marriage Allowance: if one spouse has income below £12,570, they can transfer £1,260 of their allowance, saving up to £252 a year
- Savings: the starting rate for savings (up to £5,000 at 0%) and the Personal Savings Allowance (£1,000 for basic-rate taxpayers)
- Dividends: the £500 dividend allowance
- ISAs: interest, dividends and gains are tax-free
- Pension lump sums: 25% of most pension pots can be taken tax-free, up to the lump sum allowance
Plan your withdrawals
If you can choose when to take income from a defined contribution pension, spread withdrawals over several tax years. That keeps more income in the basic-rate band and avoids emergency tax on one large payment.
Help with checking your tax
Age UK, TaxAid and Tax Help for Older People offer free help to pensioners on low incomes. You can also see your tax code, income figures and any Simple Assessment bill in the HMRC app or your online personal tax account.
Frequently asked questions
Do pensioners pay National Insurance?
No, not on pensions or on earnings after State Pension age (employers still pay theirs).
Will the allowance be unfrozen?
It’s frozen until April 2031 under current plans. Check gov.uk for changes.
Do I have to fill in a tax return?
Not usually, unless you have untaxed income such as rent or self-employment.
Can my tax code be wrong?
Yes. Check every notice and tell HMRC if the figures are wrong.
Related: why more pensioners are paying tax and paying tax on your State Pension.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with pension income and the Personal Allowance. See our personal tax accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
