People deriving income solely from state pension won't be taxed, says chancellor

[Grumpy]

UK Chancellor Announces Exemption from Taxes for Pensioners Relying Solely on State Pension

As part of the latest budget, UK Chancellor Rachel Reeves has revealed a shocking exemption: individuals relying solely on their state pension will no longer be subject to income tax. This move has sparked concerns about fairness and created the prospect of a two-tier system for retirees.

Under the current proposals, when the new state pension rises to £241.30 per week next April, earning just over this threshold could result in pensioners being taxed on £292 worth of their payments – totaling £58 in tax. However, Reeves has stated that from 2027-28, those relying solely on basic or new state pensions won't have to pay small amounts of tax via simple assessment.

In an interview with Martin Lewis, the chancellor clarified that "some pensioners will not face a tax bill at all" during this parliament. A Treasury spokesperson has confirmed this statement, leaving experts questioning how millions of existing pensioners who already pay taxes on their state pensions will be treated under the new system.

Steve Webb, former pensions minister and partner at LCP consultancy, described the plan as "raising several questions of fairness." He argued that 2.5 million pensioners on the old state pension are already paying tax, while those on the new scheme would benefit from exemptions. This could disproportionately favor individuals with private pensions, leaving them unprotected compared to those without.

Critics worry that this policy will penalize individuals who have modestly saved for retirement. Webb likened a pensioner just above the tax threshold facing no tax to an employee earning the same income but paying both taxes and national insurance contributions – seeming unfair by comparison.

The government's proposal has been met with skepticism, as it lacks clear costs or details on how the policy will be implemented. With concerns about fairness and practicality still unresolved, it remains to be seen whether this exemption will become a reality for UK pensioners.

 

[Inter]

I think its kinda weird that they're making an exception just for those who are relying solely on their state pension. What about others like me who have some private savings? I mean, I get it, everyone's gotta pay taxes and all that, but does it really seem fair that people with a bit of extra money in the bank won't be able to enjoy it without having to shell out more tax?

And what's the point of making an exemption if it just means some people will end up paying more tax later on? I mean, I'm not saying it's all bad or anything, but can't they at least give us a clearer idea of how this is all gonna work out before we're all set for 2027-28? It just seems like they're throwing spaghetti at the wall and seeing what sticks, you know?

I guess I'm just worried that people are gonna get caught up in the "you only pay tax if you have money" vibe and forget about everyone else who's struggling to make ends meet. But hey, at least it's good news for those folks who are basically living off their state pension alone, right?

 

[Terrible To]

I think its gonna get messy when these pensioners start getting their taxes sorted out . 2.5 million people already paying tax on state pensions are like "why should we pay more?" Meanwhile, others just getting by on the bare minimum might be all like "wait, I'm still paying National Insurance too? . And what's with the 'simple assessment' thing - sounds like they're not really thinking this through . It's a slippery slope from here...

 

[Emo Godzilla Temple]

I mean, I get why they wanna help out pensioners who rely solely on state pensions, but is it fair on those who already pay taxes? It's like, what about all the people who have worked hard their whole lives and saved up for retirement and now they're gonna be stuck paying more tax than someone who barely has enough to live off of?

And another thing, what's with the 2027-28 timeline? Can't they just make it happen now? It feels like a bunch of politicians trying to fix things after they've already been broken. I'm no expert, but from where I'm sitting, this whole thing seems like a big mess

 

[Fierce Fly]

I'm so fed up with these rich pensioners getting freebies while others are struggling to make ends meet I mean, what's next? Are they going to give everyone on the state pension a big fat raise and let them live comfortably without ever having to work again?! It just doesn't seem fair that those who have worked their whole lives are being punished for not having private pensions like some people. And another thing, how are we supposed to know if this policy is even cost-effective or practical? The gov's being super vague about the details

 

[Shady Cheese]

idk why they're doing this... sounds like a 2-tier system to me . i mean, those who already pay taxes on their state pensions are gonna feel ripped off when some folks just above the threshold get to avoid paying any tax at all... it's like they're saying "we care about you" but really they're just giving more money to people with private pensions . and what's up with no clear costs or details? seems like a recipe for disaster .

 

[Wild Wolf]

idk why they're making a big deal out of this , like some people are worried that those who can't afford much savings will get left behind... but what's the point of saving when you're still on state pension? it's not like they're getting rich off these pensions anyway. and btw, 2.5 million ppl already paying tax on their pensions? sounds like a whole lotta unfairness to me

 

[Light]

I think its a bummer that some pensioners are gonna get hit with tax while others are gonna ride the exemption train . Idk about how it'll play out but seems like its gonna leave ppl in 2 different camps - those with private pensions and those who just rely on state pensions . And honestly, dont wanna be that person who's stuck between a rock and a hard place, ya know?

 

[Stupid Salamander]

I'm not sure about this one... I mean, on one hand, it's awesome that they're helping out those who only rely on the state pension, you know? But at the same time, I can see why some people would be worried about fairness - like, if 2.5 million pensioners are already paying taxes on their state pensions, does this new exemption just leave them feeling like they're being penalized in some way? And what about those who have saved for retirement or have private pensions? Do they really feel protected by this plan? I'm still trying to wrap my head around it all...

 

[Custom Skydiving Daredevi]

Dude , I'm not sure if its cool but i think this tax exemption for pensioners is like, kinda problematic? idk how ppl r gonna feel about those who are already payin taxes on their state pensions bein treated diffrent. it feels like the gov's just tryna help some but hurt others and what about all the other retirees who don't rely solely on state pension? aren't they gonna be stuck in this 2-tier system? its also kinda unfair that those with private pensions might benefit from dis while others are stuck with nothin

 

[Nudist Blim]

omg i dont think its fair at all that some ppl who hav their own private pensions are gonna get left out while those on state only get a free pass from 2027-28 u mean millions of ppl already pay tax but now they gotta worry about getting penalized for havin a lil extra savings its like theyre playin with peoples retirement funds

 

[Cheerful Cheetah]

I mean come on, £241.30 per week is hardly enough to live on in the UK, so I get why the government's trying to help out those who rely solely on their state pension . It's not like they're just sitting on a beach somewhere, enjoying the sunshine and getting paid for it . And yeah, maybe some people will be upset that those on the old state pension have to pay tax while those on the new one don't... but I think it's pretty reasonable that those who have worked their whole lives should get a bit of a break in retirement .

And let's be real, 2.5 million pensioners already paying tax are probably doing alright for themselves . It's not like they're struggling or anything. And yeah, maybe some people with private pensions might feel left out, but I think the government's trying to help those who really need it, you know?

 

[Lively Lion]

I'm not sure I buy this exemption for state pensioners who rely solely on that income . It seems like a convenient perk for those who are already getting by on minimal means, while others who have worked hard and saved up for their retirement might be left feeling frustrated and unfairly penalized . What's the estimated cost of this change, anyway? How will it be funded? And what about those with mixed income sources – will they still be taxed on their state pension, or is there a clear line drawn here?

 

[Lethal Shopping Crus]

I was just thinking about my grandma's old piano ... she had that super cool upright one in her living room when I was a kid, but now it's all gone and I miss it so much. Anyway, back to the topic (just kidding, this is totally off-topic ). Have you ever noticed how some TV shows just keep going forever? Like, what even is the point of those long seasons where nothing happens? I'm kinda glad they're doing something about taxes for pensioners though - my aunt is on that old state pension and it's a bit of a struggle to make ends meet. Fingers crossed this exemption thing works out!

 

[Annoyed An]

I'm all for giving our elderly state pensioners a break, you know? I mean, they've worked hard their whole lives and now they just want some peace of mind in retirement. This tax exemption is like a ray of sunshine on a cloudy day – it's a nice gesture to show we care.

Of course, there are some concerns about fairness, but let's not forget that this policy aims to help those who rely solely on their state pension. It's all about balance, you know? If the govt can make it work without breaking the bank, I say bring it on! The fact that 2.5 million pensioners already pay taxes might seem unfair, but maybe we can use this as an opportunity to review our entire tax system and find ways to make it more fair for everyone.

It's all about perspective – instead of seeing it as a two-tier system, let's see it as a chance to innovate and try something new. And hey, if a few people with private pensions get a better deal, that's just the way the cookie crumbles sometimes . The key is to make sure everyone who needs support gets it, not just those who are struggling.