Ministers have addressed concerns that rising state pension payments could leave millions facing HMRC bills

Millions of retirees have been left wondering whether rising pension payments could soon trigger an unexpected bill from HMRC.

With the state pension moving increasingly close to a critical tax threshold, pressure has been mounting on ministers to clarify what pensioners will face.

The Treasury has now confirmed that anyone relying exclusively on the full new or basic state pension, without any additional increments, will remain outside the income tax net.

Chancellor John Healey will honour the commitment first made last year by his predecessor, Rachel Reeves, that pensioners whose sole income comes from the state pension will not be required to pay tax as payments rise.

A Treasury spokesperson said: "Anyone whose only income is the full new or basic State Pension without any increments will not pay income tax and we are committed to that over this Parliament."

The assurance comes with the personal allowance still frozen at £12,570.

At present, the full new state pension stands at £230.25 per week, keeping annual payments just beneath the personal allowance.

Yet with the threshold locked in place until 2028 and the Triple Lock continuing to push pension amounts upward, the gap is narrowing each year.

The number of over-state-pension-age taxpayers is forecast to climb from 9.08 million in 2025-26 to 9.58 million the following year, driven partly by the ongoing phased increase in the state pension age from 66 to 67.

The squeeze extends well beyond retirees as HMRC projects that roughly 7.7 million people will pay the higher rate of income tax in 2026-27, up from 6.6 million just two years earlier.

In total, some 40.8 million individuals are expected to pay income tax next year.

Despite the reassurance on state pension taxation, Mr Burnham has stopped short of pledging to lift the personal allowance itself.

Speaking on Thursday, the Prime Minister said there was "no commitment" to raising the threshold, adding that the matter would be examined at the budget.

That decision will disappoint those who had hoped for broader relief from fiscal drag, which continues to pull growing numbers of earners into higher tax brackets as wages and benefits rise against static thresholds.

Meanwhile, the Treasury indicated it is already developing plans to shield retirees who depend entirely on the state pension from being caught up in the Simple Assessment tax process.

Officials said further details on how this exclusion would work will be set out "in due course".

Lily Megson-Harvey, policy director at My Pension Expert, said the announcement would offer "welcome reassurance for retirees."

"For many, the State Pension provides the foundation of their retirement finances, so knowing they will not unexpectedly be drawn into paying tax should help people plan with greater confidence," Ms Megson-Harvey said.

She cautioned, however, that retirees with workplace pensions or modest private savings would "still be looking for clarity on how any future tax changes could affect their wider retirement income."

Ms Megson-Harvey stressed that navigating retirement finances was growing ever more complicated, arguing that "better access to regulated financial advice will be essential in helping people understand what these changes mean for them, make informed decisions and plan for retirement with confidence."