# 2026 Budget Pension Changes

> Pensioners face tax hikes but new state pension rate boosts.
- Title: 2026 Budget Pension Changes · MoneyWeek | Shortify
- Summary: Pensioners face tax hikes but new state pension rate boosts. Pensioners in the UK will see tax increases on savings and rental income but a new pension tax…
- Keywords: pension tax, state pension, savings tax, rental income tax, pension allowance, triple lock, pension death benefits, terminal illness definition, pension lump sum, MoneyWeek
- Source: MoneyWeek — https://moneyweek.com/personal-finance/pensions/what-budget-means-for-pensioners
- Published: 2026-10-31T06:00:00+00:00
- Read time: 1 min
- Topics: uk, pension tax, state pension, savings tax, rental income tax, pension allowance, triple lock, pension death benefits, terminal illness definition, pension lump sum
## Budget's Pension Tax Allowance
A new pension tax allowance for low-earning pensioners equals the 2027/28 full state pension rate of £13,037 per year.
## Pension Tax Allowance Reduction
The allowance reduces by £1 for every £3 of income above £13,037, disappearing at £13,319.
## Savings Tax Increase
Savings tax rates rise by two percentage points from April 2027, taxing interest at 24% for basic rate taxpayers.
## Savings Tax Impact
Higher rate taxpayers face 44% tax on savings interest, while additional rate taxpayers pay 49%.
## Pension Death Benefits Change
The two-year rule for tax-free pension death benefits is removed for beneficiaries.
## Terminal Illness Definition
New rules allow pension lump sums for those expected to die within 12 months.
## State Pension Triple Lock
The triple lock will adjust from 2030 to ensure state pension keeps pace with inflation and earnings.
## Rental Income Tax Increase
Tax on rental income rises by two percentage points from April 2027.
## Pensioner Advice
Pensioners should review savings and rental income before April 2027 to avoid tax traps.
## Key takeaway

Pensioners in the UK will see tax increases on savings and rental income but a new pension tax allowance prevents income tax for those earning under £13,037 annually.