Rachel Reeves is drawing up a “workaround” in an attempt to prevent state pensioners paying income tax.

From April 2027, anyone earning the full new state pension will receive more than £12,570 – taking them above the income tax threshold. The levy is in the middle of a nine-year long freeze.

That is because the pension rises by the triple lock – increasing by the highest of inflation, average wages or 2.5pc each year – but the income tax threshold is in the middle of a nine-year long freeze.

But the Chancellor has promised that affected pensioners will not have to pay any income tax at all.

Speaking to Martin Lewis on ITV, she said: “In this Parliament, they will not have to pay the tax. We are looking at a simple workaround at the moment.”

The full new state pension is set to rise to £12,548 next April, then to at least £12,862 the following year.

If no action is taken, a pensioner with no other income would owe £58 of tax as a result.

The Chancellor set out a plan in this week’s Budget to avoid large numbers of retirees having to fill out even a “simple assessment” tax return “to pay small amounts of tax”.

But Ms Reeves’s latest statements mean this will now no longer be relevant, as state pensioners will not owe anything.

She said: “If you just have a state pension [and] you don’t have any other pension, we are not going to make you fill in a tax return. I make that commitment for this Parliament.

“2027 looks like the time it will cross over [the tax threshold]. We are working on a solution, as we speak, to ensure that we are not going after tiny amounts of money.”

The new policy is reminiscent of the “Triple Lock Plus” proposed by the Conservatives before the 2024 election.

Then-prime minister Rishi Sunak said that if his party won another term in power “the tax free allowance for pensioners [would] always rise with the highest of inflation, earnings or 2.5pc – so the new state pension doesn’t get dragged into income tax.”

If this route is followed by the Chancellor, it means workers will be paying more tax than pensioners through frozen thresholds to fund ever-higher benefit payments. The state pension is already guaranteed to rise faster than wages over time because of the triple lock.

Pensioner spending is set to hit £195.4bn by 2030-31, making up almost half of the entire £406.2bn annual welfare bill, according to the Office for Budget Responsibility.

The move would also reverse George Osborne’s “granny tax” of 2023, when the then-chancellor aligned tax thresholds so that income tax was incurred at the same level regardless of the age of claimants.

It would not be the only way in which older taxpayers receive softer treatment than workers.

Ms Reeves’s second Budget also cut the annual cash ISA allowance for those aged under-65, while maintaining the £20,000 per year option for people over that age.

Pensioners in £2m-plus houses will also be able to delay paying Labour’s new property tax until they die.

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