Millions of state pensioners in the UK are set to face taxation on their pension income for the first time in 2026 under the Labour government. This comes as the full state pension is expected to rise to £12,631 in April 2026, surpassing the personal allowance threshold of £12,570.
As a result, pensioners who rely solely on the state pension will find themselves liable to pay income tax, with basic rate taxpayers facing an annual tax bill of just over £12. This marks a significant shift, as many pensioners have previously been exempt from such taxes due to their income falling below the threshold.
The news has sparked frustration among retirees, who are already grappling with the rising cost of living. William Pickup, a pensioner, expressed his anger at the Labour government, accusing them of “utterly lying” about energy bill support. He highlighted the financial strain caused by soaring energy costs during the Ukraine war, which saw his daily heating bills reach £30 at one point.
Although energy prices have since decreased, Pickup feels betrayed by the government’s failure to deliver on its promise of a £300 cut in energy bills. Instead, he claims that this support has been withdrawn from 10 million pensioners, leaving many struggling to afford heating and other essentials.
The financial pressures on pensioners are further exacerbated by the government’s decision to freeze housing benefits until 2026. Work and Pensions Secretary Liz Kendall confirmed that local housing allowance rates will remain unchanged, affecting Housing Benefit for private tenants.
This follows a previous four-year freeze at 2019 levels, which was only briefly lifted in April 2024. The freeze means that many pensioners and low-income households will continue to face difficulties covering housing costs, particularly as rents rise across the country.
In addition to these challenges, the government has scrapped winter fuel payments for all but the poorest pensioners, leaving many older people struggling to afford heating during the colder months. Alan Lees, representing Later Life Ambitions, a group advocating for 250,000 pensioners, has called on the government to reconsider its decision to freeze tax thresholds and to provide more support for retirees. He warned that pensioners are being unfairly penalized for modest increases in their income and urged the government to take urgent action to alleviate their financial burden.
The combination of rising taxes, frozen housing benefits, and reduced energy support has left many pensioners feeling abandoned and financially vulnerable. As the cost of living crisis continues to bite, retirees who depend on the state pension are finding it increasingly difficult to make ends meet.
Critics argue that the government must do more to protect pensioners, who are among the most vulnerable members of society. With millions set to be affected by these changes in the coming years, the pressure is mounting on the Labour government to address these concerns and provide meaningful support to those in need.
