Update on £14,000 tax threshold change call after key MP debate | Personal Finance | Finance

A new campaign has been launched to persuade Chancellor Rachel Reeves to increase frozen income tax relief for state pensioners. Currently anyone earning more than £12,570 is subject to income tax, and the full new state pension is expected to clear this hurdle in 2027.

The tax threshold has been frozen since 2021 and in the last Budget Ms Reeves announced this would be extended until 2031. A petition has been started on the parliament’s website Increasing this figure to £14,000 for all Britons, with particular help for state pensioners.

Geoffrey Lawson’s petition said: “Increase the income tax personal allowance to cover the State Pension from £12,570 to £14,000. This will put all State pensioners, including older pensioners paying into the SERPS or State second pension, on an equal footing by the end of this Parliament.”

“We believe the Chancellor’s proposals that only new State Pension recipients will not face additional tax claims due to the Triple Lock are flawed as they favor pensioners who have retired with the New state pension benefit since 2016, thus creating an unfair system. We believe older pensioners who have paid into the SERPS or second state pension in the past will be discriminated against because of the Chancellor’s proposals.”

Pressure is mounting on Ms Reeves over tax thresholds; There was a debate in the House of Commons this week after a petition reached 120,000 signatures. Anger grows over tax threshold freeze Freezing income tax thresholds is forcing millions of low-income workers to pay income tax or higher rates as wages rise. The Institute for Fiscal Studies (IFS) has warned that this “fiscal drift” is hitting the lowest paid the hardest, dragging minimum wage earners and pensioners into the tax net and significantly increasing their tax bills.

In this week’s debate, the government responded to a petition calling for reform that would double the UK state pension tax threshold from the current level of £12,570 to £25,140. The government has officially ruled out doubling personal tax relief for state pensioners following a row in Westminster Hall sparked by an e-petition with more than 120,000 signatures.

During the debate on June 15, 2026, cross-party MPs expressed concern that personal tax thresholds frozen together with the freeze on state pensions protected by the triple lock were leaving thousands of older people paying income tax. Conservative MP John Lamont, who opened the debate, stressed that dealing with unexpected tax bills from HM Revenue and Customs or being forced to fill out self-assessment forms could be “both distressing and deeply worrying for struggling pensioners”.

The petition, created by Tim Mason, was brought forward because many retirees who have worked hard and saved throughout their lives are finding their relatively small private or occupational pensions heavily taxed when they start receiving a state pension.

Mr Lamont, of the Conservative Party, said: “There are growing concerns that increasing numbers of pensioners are finding themselves liable to pay tax on their pensions. This is because the triple lock increases the state pension from year to year, while personal tax deductions remain frozen. “As a result, some pensioners are required to complete a self-assessment tax return, while others are receiving unexpected tax bills from HM Revenue and Customs.

“Many retirees have no significant income and limited savings, so dealing with tax claims for struggling retirees can be both distressing and deeply worrying. As Silver Voices has highlighted, taxing government pensions risks undermining the principle of a retirement safety net designed to ensure people can meet the basic needs of life in retirement.”

Conservative MP Mark Garnier directly challenged the Government on the main purpose of the petition, asking whether the minister was willing to raise the tax-free threshold for pensioners to £25,140; it would effectively keep this figure at 200% of an employed person’s allowance. Speaking of the Chancellor, he said: “After promising not to extend the freeze – which is something we would have supported – he went back on his word and chose not to protect hard-working people.” This is important for pensioners because the state pension will soon rise above the income tax threshold because of the triple lock, which we all agree is a good thing to address the problems that arise when the Column 265WH is located here Toggle showing location of Column 265WH state pension falls to, I think, 13 per cent or about 13 per cent. 14% of average earnings. This means retirees must now start paying income tax.

“The government has proposed that basic rate state pensioners should not have to fill out a tax return, but this appears to be a form-filling break of some sort for the over-67s rather than a real increase in the allowance.

“I look forward to hearing from the Minister whether he is willing to increase the tax-free threshold from £12,500 or thereabouts to £25,140, ​​as set out in this petition, and then keep this at 200% of the working person’s tax-free threshold.”

Pensions Minister Torsten Bell issued a clear rejection to campaigners, stating clearly that “no political party will push for a doubling of the personal allowance for pensioners”. He explained that such a significant increase would lead to a financial cost of “several billion pounds each year” and argued that it was inconsistent with the Government’s two main priorities: increasing the basic state pension and saving the NHS.

Mr Bell defended the Government’s position by stating that the tax system had always treated pensions as taxable income, noting that more than 80% of pensioners were already paying income tax by the end of the previous Conservative administration. He added that extending the freeze on personal allowances was a necessary choice to put public finances on a sustainable footing, stressing that the UK’s tax system remains progressive and “those with more money contribute more”.

He said: “The annual amount of the new state pension is expected to increase by around £2,100 across this Parliament, reflecting our manifesto commitment to increase through the triple lock across this Parliament.”

While the £25,140 threshold was rejected, Bell confirmed some administrative relief for older taxpayers would be forthcoming. He announced that the next Finance Bill will include special measures to ease the administrative burden on retirees and ensure that retirees do not have to deal with the “simple assessment” process to pay small amounts of tax between 2027-28.

“Members will know that basic and new state pensions increased by 4.8% in April; I think there is a matter of cross-party consensus that this is a good thing. This will increase pensioners’ incomes by up to £575 a year. We are also protecting the poorest pensioners with a 4.8% increase in the pension credit minimum guarantee.”

Despite rejecting the petition’s main objective, MPs in parliament agreed on the debate’s underlying idea: that retirees who work hard and contribute to society “deserve dignity, security and peace of mind in retirement.”

To read and support the new petition Click here.

To watch the entire discussion Click here.