{
  "id": 17055236,
  "title": "Healey’s ‘bizarre’ pension tax shield to hit thousands of retirees with 53 per cent tax rate",
  "url": "https://urgent.news/2026/10/29/healeys-bizarre-pension-tax-shield-to-hit-thousands-of-retirees-with",
  "topic": "business",
  "section": "Business",
  "published": "2026-10-29T11:11:12.000Z",
  "source": {
    "name": "City AM",
    "slug": "city-am",
    "url": "https://www.cityam.com/healeys-bizarre-pension-tax-shield-to-hit-thousands-of-retirees-with-53-per-cent-tax-rate/"
  },
  "original_language": "en",
  "account": "Retirees earning just above the state pension threshold could face an effective 53 percent tax rate, according to new rules announced by Chancellor John Healey in his first Budget. The policy, introduced to shield the UK’s poorest pensioners from income tax, is set to go into effect in April 2027, when the state pension surpasses the personal allowance. The state benefit will increase by £489 to £13,036, pushing recipients above the £12,570 threshold, where income tax is typically applicable.\n\nHealey's adjustment of the threshold is intended to prevent the poorest retirees from paying income tax, but those earning slightly above the new threshold will be subject to a peculiar 53 percent tax rate. This rate consists of a 20 percent basic income tax rate, plus a loss of 33 percent of the tax break for every pound earned above the threshold.\n\nAccording to pensions consultant LCP and former pensions minister Steve Webb, pensioners earning £13,319 or above will see their tax break reduced to zero, effectively facing a 53 percent tax rate on that income. Webb criticized the policy, stating that it creates a bizarre situation where around 200,000 low-income pensioners are subjected to such a high tax rate. Webb emphasized that while high income tax rates are common for top earners, this is an unusual scenario for those with modest incomes.\n\nThe policy's complexity, he added, was introduced to address a short-term issue without a long-term solution in mind. Advisers had cautioned Healey against implementing the policy, as the gap between the state pension and the frozen tax threshold will continue to widen, potentially costing taxpayers £200 million annually by 2030. The state pension is projected to reach £250.70 per week, or £13,036 per year, in the 2027/28 tax year, exceeding the threshold by £466.40. By the 2029/30 financial year, the pension is expected to climb to £263.35 per week, or £13,694 per year, surpassing the allowance by £1,124.20.",
  "summary": "Hundreds of thousands of low-income pensioners are set to pay an effective 53 per cent tax rate on part of their retirement income, under new rules introduced by John Healey in his maiden Budget. The Chancellor confirmed he will shield low-income pensioners from income tax as the state pension is set to rise above the [...]",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}