Cookies are small text files that are stored on your computer when you visit a website. They are mainly used as a way of improving the website functionalities or to provide more advanced statistical data.
Deferring your state pension will lose your income tax exemption
Newsletter issue – October 2026
Earlier in the year, the then Chancellor, Rachel Reeves, promised that pensioners who rely solely on the state pension will not pay income tax, but this exemption will not apply to those who defer their state pension.
The state pension is expected to rise by over £500 next year, taking it above the £12,570 personal allowance for the first time. Experts believe it may reach over £13,000 if next year's uplift matches wages growth. Deferral increases the pension by 1% every nine weeks, or 5.8% per year. Under the government's rules, someone deferring for one year and claiming in April 2027 could face an extra tax bill of up to £560, while someone claiming immediately would pay nothing.
Analysis from consultants, LCP, shows the exemption pledge helps only 800k out of 13.2m pensioners. Those with Serps, living abroad, or receiving other taxable income will not qualify. Experts feel it is 'odd to penalise those who defer and not those who don't', especially when the government wants people to work longer.
What our clients say about us...
"Paul has provided accountancy services to my company for 2 years now. I can recommend Paul very highly; his skills as an accountant are highly detailed and professional and he is always available to provide advice. One aspect of the way Paul works that I greatly appreciate is a preference to meet face to face when there is a detailed conversation to be had. I personally find this more productive and is a benefit of working with a small accountancy firm that you wouldn't get with the large faceless providers."
ALISTAIR FAIRWEATHER - PROGRAMME & PROJECT MANAGER, DELIVERING/RESCUING I.T. 7 BUSINESS CHANGE WITH BUDGETS UPTO £50M INC SUPPIER MANAGEMENT
"I couldn't ask for more from Paul as an Accountant. Paul has been accountant to Work Relief Charity Recruitment for just over a year now and is proving an invaluable asset. Accurate, knowledgeable, flexible with an emphasis on service delivery, I would recommend Paul's services to any organisation looking for an accounts professional."
Neil Price - Managing Director at Work Relief Charity Recruitment
"Paul was a referral from a family member when I started my business 2 years ago. As this was the first time I had ever run my own company I was totally clueless over the financial side of matters and was worried that I may have made mistakes in any of my accounting. I needn't have worried as after enaging Paul for a set monthly fee he was always there on the end of the phone for all sorts of questions I had and no matter how trivial they were Paul gave me all the information I required and more and did an excellent and painless job at the end of my first year! Couldn't ask for any better to be honest. Just two words - hire him!!!"
Lee Westrap MBCS - Director - Bulldog IT Services
Please complete our form
to request a callback
Competitive fixed quotes
for agreed services
Increase your profit and
reduce tax liabilities
Expert advice for your
business size
