The UK Treasury has formally addressed a growing petition calling for a new tax code to alleviate the burden on pensioners, particularly those relying solely on the State Pension. The petition advocates for doubling the personal tax allowance for pensioners, a proposal that has sparked debate as the government faces increasing pressure to adjust tax thresholds.
This response highlights the tension between the government’s financial constraints and the increasing demands from citizens, who argue that pensioners with lower incomes are unfairly taxed. As pensioners are set to face a greater tax burden in the coming years, the debate over tax exemptions for older citizens is intensifying.
Petition for a New Tax Code Gains Momentum
The petition, initiated by Timothy Hugh Mason, calls on the government to introduce a new tax code specifically for pensioners, effectively doubling the personal tax allowance to offer them a higher tax-exempt limit. According to the petition, this would shield pensioners with smaller private or workplace pensions from unfair taxation while still ensuring that wealthier pensioners contribute fairly.
The core of the petition’s argument is the impact of the government’s decision to freeze the income tax threshold of £12,570 until 2031. The freeze, according to Mason, will push many pensioners, particularly those receiving the new State Pension, into paying tax, as their incomes are expected to rise in line with the government’s “triple lock” guarantee. For instance, the new State Pension will increase from £230.25 to £241.30 per week in April 2025, which brings the yearly total to £12,548. Although just below the current threshold, the increase pushes many pensioners closer to it.
The petition now has over 25,000 signatures, reflecting widespread concern. Public support for raising tax exemptions for pensioners is not new; earlier petitions, such as one advocating for raising the threshold to £20,000, garnered even larger responses. The Treasury’s response indicates that this issue is far from resolved and suggests the government is considering ways to address the needs of pensioners without dramatically increasing costs.
Treasury’s Response: A Complex Balancing Act
In its official response, the Treasury rejected the idea of doubling the personal tax allowance for pensioners. According to the Treasury, such a move would be “untargeted and costly,” disproportionately benefiting wealthier pensioners and adding significant financial strain on the government’s budget. Instead, the Treasury reiterated its commitment to the triple lock, which guarantees annual increases in the State Pension, and highlighted that the personal tax allowance in the UK is already among the highest in the G7 countries.
However, the Treasury acknowledged the issue of pensioners being pushed into tax liability due to the freeze on the income tax threshold. To address this, it announced plans to ease the administrative burden for pensioners whose sole income is the basic or new State Pension. From 2027-28, the government intends to introduce Simple Assessment, which would exempt certain pensioners from having to pay small amounts of tax. This initiative is still under exploration, with further details expected next year.
Despite these efforts, critics argue that the Treasury’s proposals do not go far enough to ease the financial pressure on the UK’s most vulnerable pensioners. The debate surrounding the taxation of pensioners is likely to continue, especially as many see the government’s failure to raise the income tax threshold as an ongoing injustice for lower-income groups.
