UK pension tax allowance explained with £13,319 figure

Key facts

• A new Pension Tax Allowance will be introduced from April 2027.
• The allowance aims to reduce tax burdens for pensioners with lower incomes.
• The full value of the new State Pension will be £13,036.40 from April 2027.
• Individuals with income up to £13,319 may receive some or full allowance.
• HMRC will automatically apply the allowance.
• Around 1 million pensioners are expected to benefit by the end of Parliament.

The UK government is introducing a Pension Tax Allowance, set to take effect from April 2027, aimed at simplifying tax obligations for pensioners. This allowance will ensure that individuals above State Pension age whose total income does not exceed the full annual value of the new State Pension will not be liable for income tax on that pension. For those with slightly higher incomes, the allowance will gradually reduce, ensuring they pay less tax than they otherwise would. HMRC will automatically apply this allowance based on existing income and State Pension age information.