HMRC Over 65 Tax Changes 2026: What Pensioners Need to Know

If you’re retired or approaching retirement, the tax rules around your state pension and savings can feel like a moving target. With the personal allowance frozen until 2028 and interest rates climbing, many over-65s face a bigger tax bill than they expected. This article breaks down the key HMRC rules, how rising savings income is affecting pensioners, and what changes—if any—are coming in 2026.

Personal allowance 2025/26: £12,570 ·
Full new State Pension (weekly): £221.20 ·
Basic old State Pension (weekly): £169.50 ·
Over-65s savings tax increase (2025/26 forecast): 21.5% ·
Age-related allowance: Abolished since 2013

Here are the key numbers that define the tax landscape for over-65s in 2025/26.

The contrast between UK and Irish pension tax treatment can be sharp for those moving across the Irish Sea.

What is the maximum a pensioner can earn before paying taxes?

What is the personal allowance for over 65s?

• The personal allowance for 2025/26 is £12,570 for most people. There is no separate age-related allowance since 2013 (GOV.UK – HMRC official rates).
• Income from the state pension uses up part of this allowance, so many pensioners already see their tax-free amount reduced.

Do seniors over 65 get an extra tax deduction?

• No. Age-related personal allowances were abolished from April 2013. Before that, people aged 65–74 had an allowance of £10,500 and age 75+ had £10,660 (2012/13) (GOV.UK – historical rates).
• Since 2013, over-65s are treated the same as younger taxpayers for personal allowance purposes.

How does marriage allowance affect pensioners?

• Marriage allowance allows one partner to transfer up to £1,260 of unused personal allowance to the other. This is available if both partners were born after 6 April 1935 (GOV.UK – Marriage Allowance).
• For pensioner couples where one spouse has low income, this can reduce the overall tax bill by up to £252 a year.

The implication: pensioners need to carefully monitor their total income to avoid unexpected tax bills.

What happens to my UK state pension if I move to Ireland?

Can I claim both Irish and UK state pensions?

• Yes, you can claim both if you have enough contributions in each country. The UK state pension is payable worldwide, including Ireland (GOV.UK – State Pension abroad).
• Ireland’s state pension is based on PRSI contributions. You may qualify for a partial Irish pension if you have worked in Ireland.

Does HMRC know if you move abroad?

• Yes. HMRC must be informed of your move. They share data with Irish tax authorities under automatic exchange agreements (GOV.UK – Moving abroad).
• You should notify HMRC via a P85 form or online to update your tax code and ensure correct tax treatment.

How is my UK pension taxed when I live in Ireland?

• Under the UK-Ireland double taxation agreement, UK state pension income is taxable only in Ireland. You’ll declare it on your Irish tax return (Revenue Ireland – foreign pensions).
• You may be entitled to a tax credit or relief in Ireland for the tax paid in the UK (if any). Irish income tax rates (20%/40%) apply, with a personal tax credit of €1,875 in 2025.

The pattern: for pensioners moving to Ireland, the double taxation agreement basically shifts tax liability to Ireland, but the benefit depends on individual circumstances.

How much money can a pensioner have in the bank before it affects their pension?

Does savings income count as taxable income?

• Yes. Savings interest counts as income for tax purposes. It uses your personal allowance first, then the personal savings allowance.
• The UK starter rate for savings can provide up to £5,000 of savings interest at 0% for people whose non-savings income is low enough (below £17,570 total) (Saga Money – state pension tax guide).

What is the personal savings allowance for over 65s?

• For basic-rate taxpayers: £1,000; higher-rate: £500; additional-rate: £0. Over-65s do not get a larger savings allowance than other age groups (Moneyfacts – savings tax for over-65s).
• With interest rates rising, many over-65s now exceed this allowance. Moneyfacts reports a 21.5% forecast increase in tax paid on savings by 2025/26.

How is pension credit affected by savings?

• Pension credit is means-tested. Savings over £10,000 are assumed to generate income (a “tariff income” of £1 per week for every £500 above £10,000). Savings over £10,000 reduce entitlement (Age UK – Pension Credit).
• This means having savings can reduce your pension credit even if you don’t actually earn interest on them.

What this means: pensioners with even modest savings are increasingly caught in the tax net as interest rates stay high.

What is the lowest state pension amount?

Full new State Pension vs old basic State Pension

• Full new State Pension (for those reaching state pension age after 6 April 2016): £221.20 per week in 2025/26 (GOV.UK – new State Pension).
• Basic old State Pension (for those who reached state pension age before 6 April 2016): £169.50 per week in 2025/26 (GOV.UK – basic State Pension).

What is the minimum State Pension?

• The absolute minimum is around £69.50 per week for people with very few qualifying years (10 years of National Insurance payments) (GOV.UK – State Pension calculation).
• If your total income is low, you can apply for Pension Credit to top up to at least £227.10 per week (single person, 2025/26).

How to check your State Pension forecast

• Use the online State Pension forecast tool on GOV.UK or request a paper statement by post.
• You can also contact the Future Pension Centre for personalised guidance.

The catch: many pensioners will soon see their full state pension becoming taxable, even if they have no other income.

What are the HMRC over 65 tax changes for pensioners?

Is the tax allowance for pensioners going up?

• No. The personal allowance is frozen at £12,570 until April 2028 (GOV.UK – rates and allowances).
• The state pension triple lock means the pension rises each year by the highest of inflation, earnings, or 2.5%. This year it’s 4.8% – so the pension is catching up to the allowance.

What tax changes are planned for 2026 in the UK?

• No specific age-related tax changes for over-65s have been announced for 2026.
• The government has said it will maintain the personal allowance freeze and the triple lock. A new “fiscal event” may bring adjustments, but none are confirmed.

How are over-65s paying more tax on savings interest?

• Moneyfacts analysis of HMRC data shows that over-65s paid 21.5% more income tax on savings interest between 2022/23 and 2025/26 (Moneyfacts – savings tax increase).
• This is driven by rising interest rates pushing more pensioners above the £1,000 savings allowance. Higher-rate taxpayers (income over £50,270) only get a £500 allowance.

The implication: without policy changes, nearly all pensioners will become taxpayers in the coming years.

Timeline: How we got here and where we’re heading

• 2013 – Age-related personal allowances abolished (GOV.UK)
• 2025/26 – Over-65s projected to pay 21.5% more tax on savings interest (Moneyfacts)
• 2026 – State Pension rises by 4.8% (forecast) – no confirmed tax changes for over-65s
• Until 2028 – Personal allowance frozen at £12,570

The pattern is one of incremental fiscal drag: frozen allowances and rising pension values steadily pull more pensioners into the tax net.

Clarity check: What we know and what remains uncertain

The balance of knowns and unknowns underlines the need for personalised financial planning for over-65s.

Expert perspectives

“The rising interest rate environment means more pensioners are exceeding their personal savings allowance. We’re seeing a 21.5% increase in tax paid on savings by over-65s.”

– Moneyfacts spokesperson (savings comparison authority)

“It’s essential for pensioners to understand that their state pension counts as income and uses up their personal allowance. Many are surprised to find they owe tax even if they have no other earnings.”

– Age UK financial expert (charity for older people)

For pensioners approaching retirement in 2026, the choice is clear: review your total income including state pension and savings, or face an unexpected tax bill. The pattern is that rising pension and savings income are slowly pushing more over-65s into the tax net – a reality that won’t reverse until the allowance rises again.

For a detailed breakdown of how these rules affect older taxpayers, see the full guide on HMRC over 65 tax changes.

Frequently asked questions