Pensioners living mainly on the state pension have been given a fresh tax promise by Andy Burnham as he set out plans for a national care service.
The Prime Minister said low-income pensioners will not be “dragged into paying income tax” during this Parliament, as he linked the pledge to his wider offer of a rising state pension and no care charges.
Under the current rules, the standard Personal Allowance is £12,570 – the amount of income an individual can receive before they normally start paying Income Tax. The allowance is currently frozen at that level.
Burnham told Labour conference: “Some may not realize it, but older people with nothing more than the state pension, or only a little more, can find themselves paying care charges today from that small income. Under my plan, this will no longer happen.
“I can also confirm today our commitment to ensure that the low-income pensioners won't be dragged into paying income tax in this Parliament.
“So this is the deal: a state pension that rises every year, no care charges, and a high-quality national care service to give peace of mind in later life. Conference, I am going to go out and argue for that-a good deal for our pensioners and for older people in the 21st century”
What is the Personal Allowance?
The Personal Allowance is the amount of income people can normally receive each tax year before Income Tax becomes due.
For 2026/27, it stands at £12,570 and is due to remain at that level for 2027/28 under existing legislation.
Someone whose total annual income is below their Personal Allowance will not normally pay Income Tax. This includes pension income.
The full new state pension is currently below the Personal Allowance, meaning someone receiving only the full new state pension would not normally have an Income Tax bill on that pension alone.
However, people with other taxable income can have a tax liability once their total income exceeds their available allowance.
Why is the tax pledge important for pensioners?
The issue is particularly significant because the state pension is increasing while the Personal Allowance has remained frozen.
Burnham's pledge means the Government is committing to ensuring that low-income pensioners are not pulled into Income Tax during this Parliament.
The precise mechanism for achieving that commitment was not set out in the speech.
The Personal Allowance is currently £12,570, while the full new state pension is £241.30 a week, or around £12,548 a year when paid for 52 weeks.
That leaves only a small gap between the full new state pension and the current tax-free allowance.
Pensioners offered a wider deal
Burnham presented the tax pledge as one part of a broader package for older people.
He said his plan would combine a state pension that continues to rise each year with no care charges and a national care service.
His comments come as the Government faces a major debate over how such a service would be funded.
Burnham has also put the future of the state pension triple lock into the wider conversation, although the Government has said the existing commitment will remain during this Parliament.
The triple lock currently guarantees that the state pension rises each year by whichever is highest of inflation, average wage growth or 2.5 per cent.
Recommended reading:
- What is the triple lock? The DWP state pension rule facing Budget pressure
- The DWP State Pension age change being proposed to help young adults get jobs
- Pensioners hoping for £14,500 State Pension get major DWP response
What happens if your income is above the Personal Allowance?
If someone's taxable income is above £12,570, Income Tax can be due on the amount above the allowance, depending on their circumstances and tax bands.
For 2026/27, the basic Income Tax rate in England, Wales and Northern Ireland is 20 per cent on taxable income within the basic-rate band.
This means pensioners with a state pension plus private or workplace pension income, earnings or other taxable income may have to pay tax even if their state pension itself is below the Personal Allowance.
Burnham's conference pledge puts the Personal Allowance alongside the state pension and social care at the heart of his offer to older people.
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