Will you have to pay tax on your state pension?

The full new state pension will rise to £13,036 a year from April 2027, breaching the £12,570 personal allowance for the first time.

The rise is thanks to the triple lock, a mechanism which increases the state pension by the highest out of wage growth, inflation or 2.5% every year.

As earnings growth was the strongest of these metrics this year, coming in at 3.9% in the three months to July, the full new state pension will rise to £250.70 a week for the 2027/28 tax year.

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It means that for the first time, retirees who only receive an income from the full new state pension will pass the tax-free £12,570 personal allowance.

The state pension is a form of taxable income, but previously fell within the tax-free personal allowance, which is frozen at £12,570.

While the rise was due to tip some lower-income pensioners into the basic rate tax band, a pension tax allowance, announced in the 2026 Autumn Budget, means those who only receive income from the state pension will not need to pay tax.

How the pension tax allowance will work

If you had a taxable income of £13,036, you would usually owe around £94 in income tax.

However, chancellor John Healey announced that a new tax-free allowance will be introduced in the 2027/28 tax year that means those who only receive an income from the state pension will not need to pay any tax.

The pension tax allowance will be set at £13,036 for the 2027/28 tax year and will be uprated with the full new state pension until at least April 2030.

The government says the new allowance will reduce the administrative burden for pensioners who would have otherwise had to pay small amounts of tax through simple assessment.

The pension tax allowance will be applied automatically for those eligible.

What if I have a small amount of income alongside the state pension?

If you receive a very small amount of extra income a year alongside the state pension, then you may still get some tax relief from the new allowance.

For every £3 in income you receive over £13,036, you lose £1 of the pension tax allowance.

Any extra tax relief from the pension tax allowance is lost by the time your income reaches £13,319 a year.

It means if you have an income of between £13,037 and £13,319, you will receive at least some tax relief and pay less income tax than you otherwise would.

But if your income is over £13,319, you will not receive any of the pension tax allowance.

Do you have to pay tax on other pension income?

If you have income over £13,319 from your state pension and another source, perhaps from a workplace pension or part-time work, you will have to pay some income tax despite the new allowance.

Your pension provider usually calculates your tax and deducts it from your pension income through pay as you earn (PAYE), meaning any tax you owe will be automatically paid for you.