Policy paper
Income Tax reduction for eligible pensioners
This tax information and impact note is about the introduction of an Income Tax reduction for eligible pensioners.
Documents
Details
This measure introduces a reduction in the Income Tax liability of individuals above State Pension age whose total income is equal to or less than the value of the full new State Pension.
The maximum pension tax allowance is calculated by applying the basic rate of Income Tax (20%) to the difference between the Personal Allowance and the full new State Pension.
For individuals whose total income is more than the value of the full new State Pension, the reduction will be withdrawn by £1 for every £3 of income above that amount.
The measure will apply for the tax years:
- 2027 to 2028
- 2028 to 2029
- 2029 to 2030