John Healey to Raise Pensioner Tax-Free Allowance in Budget

Chancellor John Healey is expected to announce an increase in the tax-free personal allowance for low-income pensioners during Wednesday's Budget. The state pension is scheduled to rise by £489 to £13,036 per year starting next April, which would otherwise exceed the current tax-free threshold of £12,570.

To prevent this, the government plans to raise the personal allowance to £13,036. This adjustment will shield nearly one million people from income tax and is estimated to cost taxpayers approximately £200 million annually by the end of the decade. Healey has also decided to maintain the maximum tax-free lump sum withdrawal from personal pensions at £268,275.

In a separate development, Prime Minister Andy Burnham announced plans to adjust the triple lock mechanism starting in April 2030. The government intends to use the resulting funds to support a new National Care Service in England.