As many as one million more state pensioners will pay income tax due to HMRC’s Personal Allowance rules in the next five years, new figures have revealed.

The Office for Budget Responsibility issued new forecasts following Chancellor Rachel Reeves’ Spring Statement at which she gave an update on the country’s finances.

The OBR, which is the official budget watchdog for the government, has warned that 600,000 more state pensioners will pay tax from April 2026, rising to one million by 2030-31 tax year.

This has been put down to frozen tax-free Personal Allowance rules, a decision taken by the Chancellor at the last Budget.

Under the rules, most people have a tax-free Personal Allowance threshold of £12,570. This is the amount you can earn, through work and via the state pension and some other taxable benefits, in a single tax year without owing any tax on it.

The threshold has been frozen since 2021, and Chancellor Rachel Reeves announced the limit will stay frozen for another five years, all the way to 2030-31.

This will have a knock-on effect for one million state pensioners who will begin to owe tax in this period too, the OBR says.

The state pension is and always has been subject to income tax, but generally pensioners whose only income is the state pension have not had to pay any.

This is because full state pension for the current financial year is £230.25 a week – which falls below the personal tax allowance of £12,570 a year.

For the first time since its introduction, the full new state pension is set to exceed the personal allowance in the 2027-28 tax year due to the triple lock policy guaranteeing increases in line with inflation, earnings or 2.5%, whichever is highest, each year.

HM Revenue and Customs has updated its modelling of the impact of the threshold freezes on those whose main source of income is the state pension, the OBR said.

Some pensioners with additional income streams will already be paying tax ahead of 2027-28, according to the watchdog.

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The OBR said: “The updated modelling of this population across all personal tax threshold freezes since April 2021 increases the estimate of the number of people brought into paying tax by 600,000 in 2026-27 and one million in 2030-31.

“However, much of this population is projected to pay only very small additional amounts of tax due to the freezes, so this only increases the yield of the November 2025 Budget measures by £0.1 billion in 2030-31.”

The OBR also said that the Government has promised to exempt those whose only income is the state pension from paying income tax on it in this Parliament, as announced by the Chancellor on The Martin Lewis Money Show Live in November, but has yet to set out details.