The Department for Work and Pensions has confirmed pensioners whose sole income is the Basic or New State Pension will not pay income tax over this Parliament

The Department for Work and Pensions (DWP) has confirmed that pensioners whose sole income is the Basic and full New State Pension, “without any increments, will not pay any income tax this tax year or next”. Pensions Minister Torsten Bell also said the UK Government is committed to making sure older people can live with the “dignity and respect they deserve in retirement”.

His remarks came in a written response to Labour MP Euan Stainbank who asked whether Chancellor Rachel Reeves plans to extend the income tax exemption to older people with private pensions “who receive the same income as those who solely receive the maximum State Pension”.

The Chancellor announced in November that the Personal Allowance will remain frozen at £12,570 until April 2031. Mr Bell said the State Pension is the “foundation” of the support available to people in retirement adding that over the course of this Parliament, the yearly amount of the full New State Pension is on track to go up by around £2,100.

He continued: “When it comes to taxes, social security benefits are treated differently depending on why they are paid. Generally, benefits that replace income, like the State Pension, are taxable.

“However, I can confirm that those whose sole income is the basic and full new State Pension, without any increments, will not pay any income tax this tax year or next. Furthermore, the Chancellor has said that those whose only income is the Basic or New State Pension without any increments will not have to pay income tax over this Parliament.”

The DWP explained the UK Government will achieve this by “easing the administrative burden” for pensioners so that they do not have to pay small amounts of tax via Simple Assessment from 2027/28. More details on this will be announced “in due course”, reports the Daily Record.

Millions of older people are set for a significant State Pension increase next month when the New and Basic State Pension rises by 4.8 per cent for the 2026/27 financial year. The new payment rates will take effect from 6 April.

The increase will mean those on the full New State Pension will receive £241.30 per week, whilst those on the maximum Basic State Pension will get £184.90 per week.

It’s crucial to note that the amount of State Pension someone receives depends on their National Insurance contributions. To receive the full New State Pension you need around 35 years’ worth, but this may differ if you were ‘contracted out’.

The full New State Pension will rise by approximately £574 to £12,547 over the new financial year.

Many people approaching retirement may not be aware they need to have made National Insurance contributions for a specific number of years to receive the full New State Pension of £230.25 each week

The Department for Work and Pensions ( DWP ) has revealed that the State Pension currently delivers a regular income to 13 million elderly people nationwide, with over one million pensioners in Scotland amongst them. This benefit is accessible to individuals who have reached the UK Government’s qualifying retirement age, presently set at 66 for both men and women. They also have to have accumulated a minimum of 10 years of National Insurance (NI) contributions.

The retirement age is scheduled to increase to 67 from April. People nearing retirement may be unaware that securing the full New State Pension payment of £230.25 weekly requires approximately 35 years of NI contributions. This figure represents an average, as certain individuals who were ‘contracted out’ will require additional NI contributions to qualify for the complete sum.

While workplace and private pensions will supplement the State Pension during retirement, a significant number of people may depend on this contributory benefit as their sole retirement income. This makes it essential to understand the years of NI contributions needed to secure the maximum payment.

The State Pension age is also scheduled to rise from 67 to 68 during the mid-2040s. If you’re concerned about how many years you need to work – whether retirement is decades away or just around the corner – our useful guide below should help clarify how National Insurance contributions impact the State Pension you’ll receive, reports the Daily Record.

How to qualify for any New State Pension payment

To qualify for any State Pension, you’ll require a minimum of 10 qualifying years on your National Insurance record, though these needn’t be consecutive. This means that for at least 10 years, one or more of the following circumstances applied:

• you were employed and paid National Insurance contributions
• you were receiving National Insurance credits, for instance if you were out of work, unwell, a parent or a carer
• you were making voluntary National Insurance contributions

If you’ve resided or been employed overseas, you may still be eligible for some New State Pension. You could also qualify if you’ve paid married women’s or widow’s reduced rate contributions – further details are available on the GOV.UK website.

How to qualify for full New State Pension payments

It’s important to understand that ‘full’ refers to the maximum New State Pension amount an individual can obtain.

You’ll typically need approximately 35 qualifying years to secure the full New State Pension if you don’t hold a National Insurance record dating before 6 April 2016 – this figure may be higher if you were ‘contracted out’, more information here.

Individuals who have contributed between 10 and 35 years are entitled to a proportion of the new State Pension, though not the full amount unless they purchase additional NI years.

Qualifying years while in employment

When employed, you pay National Insurance and obtain a qualifying year if:

• you’re in employment and earning more than £242 per week from a single employer
• you’re self-employed and making NI contributions

You might not make National Insurance contributions if you’re earning below £242 weekly. However, you may still secure a qualifying year if you earn between £123 and £242 per week from one employer.

Qualifying years when not in employment

You may receive National Insurance credits if you’re unable to work – for instance due to illness or disability, or if you’re a carer or unemployed.

You can obtain National Insurance credits if you:

• claim Child Benefit for a child under 12 (or under 16 prior to 2010)
• receive Jobseeker’s Allowance or Employment and Support Allowance
• are in receipt of Carer’s Allowance

If you’re neither working nor receiving National Insurance credits

You may be able to make voluntary National Insurance contributions if you’re not in any of these categories but wish to boost your State Pension amount. Further information is available on the GOV.UK website.

Even with gaps in your National Insurance (NI) record, you can still be eligible for the full New State Pension. You can request a State Pension statement which will provide an estimate of how much State Pension you might receive.

To verify if there are any gaps in your record, you can apply for a National Insurance statement from HM Revenue and Customs (HMRC). If your National Insurance record has gaps that could hinder you from receiving the full New State Pension, you may have options to:

• Acquire National Insurance credits.
• Make voluntary National Insurance contributions.

Labour MP Neil Duncan-Jordan calls for a universal system of retirement income and equal uprating for all pensions to address the widening gap between New and Basic State Pension rates

During the State Pension and benefits uprating debate in Parliament, Labour MP Neil Duncan-Jordan called on the Department for Work and Pensions (DWP) to “look again at the advantages of a universal system of income in retirement that reaches everyone”. The Poole MP also drew attention to the “unfairness” in payment rates between the New and Basic State Pension.

Mr Duncan-Jordan told fellow MPs: “For our older generation, the State Pension is the foundation on which a decent retirement can be built. The restoration of the Triple Lock has been key to raising the income of some of our poorest pensioners, which is why we need it to continue, but it would be wrong to say that the job has been done when we still have 1.9 million older people living in poverty.”

The Labour MP highlighted the disparity between the annual uprating in cash terms for those who reached State Pension age before April 2016 (Basic) or after 2016 (New), stating: “That is unfair, and we should consider uprating all pensions in the same way.”

Under the Triple Lock, both the New and Basic State Pensions increase each year in line with whichever is the highest between the average annual earnings growth from May to July (4.8%), the CPI inflation rate in the year to September (3.8%), or 2.5 per cent.

Additional State Pension elements and deferred State Pensions rise each year with the September CPI figure (3.8%), reports the Daily Record. The uplift means those receiving the full New State Pension will get £241.30 per week, while those on the maximum Basic State Pension would pocket £184.90 per week.

Speaking in Parliament, Mr Duncan-Jordan said: “Our social security system is the bedrock of our welfare state, but for years, the safety net that it was meant to provide has been developing bigger and bigger holes, through which some of our most vulnerable citizens have fallen.

“For our older generation, the State Pension is the foundation on which a decent retirement can be built. The restoration of the Triple Lock has been key to raising the income of some of our poorest pensioners, which is why we need it to continue, but it would be wrong to say that the job has been done when we still have 1.9 million older people living in poverty.”

He highlighted the “weakness” of the means-tested Pension Credit system, noting that approximately 750,000 older people are entitled to claim but haven’t yet done so, adding “that is why we need to look again at the advantages of a universal system of income in retirement that reaches everyone”.

The Labour MP went on: “Even in the current uprating arrangements, there is an unfairness. Some 8.3 million older people are in receipt of the pre-2016 State Pension, made up of a Basic State Pension and a second State Pension, which for many would have been SERPS (state earnings-related pension scheme) introduced by the late, great Barbara Castle.

“While the Triple Lock applies to the Basic State Pension for these people, the lower consumer prices index is used to uprate the second State Pension. This year, that will give a difference of 1 per cent, and over time, we have seen the gap between those on the old State Pension and the New State Pension widen. That is unfair, and we should consider uprating all pensions in the same way.”

The State Pension amount someone receives is based on their National Insurance contributions. Around 35 years’ worth are needed to qualify for the full New State Pension, though this may vary if you were ‘contracted out’.

The full New State Pension will rise by approximately £574 to £12,547 over the new financial year. However, the uprating leaves only £36 before breaching the Personal Allowance income threshold of £12,570, which would result in more pensioners with any additional income paying tax in retirement.

The UK Government recently confirmed that HM Revenue and Customs (HMRC) will introduce new measures next year to ensure that pensioners – whose only income is the State Pension – will not be required to complete a Simple Self Assessment tax return if their payment exceeds the Personal Allowance threshold of £12,570.

This follows Chancellor Rachel Reeves’ announcement during the Autumn Budget that the Personal Allowance will remain frozen at £12,570 until April 5, 2030 – extending the original timeline by three years. New State Pension payment rates 2026/27.