28 October 2026
If you are covering the new Pension Tax Allowance, please see the following comment from Jon Greer, head of retirement policy at Quilter:
“Protecting pensioners whose total income is no higher than the full new State Pension from being dragged into the tax system is sensible. But this policy is also another sticking plaster over the cracks created by years of fiscal drag. The State Pension has continued to rise while the tax-free allowance has stood still, and the government is now having to engineer a workaround to prevent some of the lowest-income pensioners being caught in the middle.
“The government has sensibly based eligibility on total income, rather than protecting only those whose sole income is the State Pension. That avoids excluding someone simply because they saved a modest amount into a private pension. But the taper adds another calculation to retirement planning. The detail will determine how much of each additional pound of income pensioners keep.
“The automatic tax deduction is welcome and should spare pensioners on modest incomes the burden of claiming relief simply to avoid a small tax bill. Clear communication will still be essential, particularly for those with incomes within the taper, so they understand what relief they receive and how it changes as their income rises.
“This is relief from the consequences of frozen thresholds, not a solution to fiscal drag. Automatic support is welcome, but pensioners need to understand how the taper works and what happens when the allowance ends in April 2030. A temporary fix should not become another source of long-term uncertainty.”
