What the Budget will mean for pensions and income tax

The first Budget under Prime Minister Andy Burnham is expected to clarify how the government plans to manage pensions, benefits and public finances amid rising living costs and limited fiscal headroom. The article says pensioners’ tax treatment may be addressed, while changes to private pension tax relief are also being discussed.

The state pension is due to rise by 3.9 per cent in April to £13,036, above the £12,570 personal allowance. Chancellor John Healey is expected to set a tax-free allowance of £13,036 for low-income pensioners whose only income is the state pension. Other proposals include a flat 20 per cent rate of pension tax relief, which could save about £15bn a year, and reversing a planned National Insurance charge on some salary-sacrificed pension contributions. The article also notes that a proposed triple-lock revision would not take effect before 2030.