The full new State Pension will rise to £11,973 from April, bringing it close to the frozen £12,570 personal allowance and raising concerns more retirees could face income tax.
Millions of pensioners are being warned this year’s State Pension increase could push more retirees into paying income tax for the first time. From April, the full New State Pension will rise to £11,973 a year, under the Triple Lock uprating guarantee.
Under the Triple Lock the New and Basic State Pensions increase each year in-line with whichever is the highest between the average annual earnings growth from May to July, Consumer Price Index (CPI) inflation rate in the year to September, or 2.5 per cent. Additional State Pension elements and deferred State Pensions rise each year with the September CPI figure.
While the increase will provide a welcome boost to pensioners’ incomes, financial experts say it also brings the payment dangerously close to the £12,570 Personal Allowance, which has been frozen until April 2031.
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That means even small amounts of additional income – such as a private pension, savings interest or part-time work – could push some retirees over the tax-free threshold.
If this happens, part of their income could become subject to income tax.
It’s important to be aware nobody whose sole income is the full New State Pension will pay any income tax on that payment, The UK Government announced during the Autumn Budget in November 2025 that measures will be put in place to enable HM Revenue and Customs (HMRC) systems to recognise this and not issue a tax demand.
However, Derence Lee, Chief Finance Officer at Shepherds Friendly warns the combination of rising State Pension payments and the frozen Personal Allowance could gradually pull thousands more pensioners into the tax net over the coming years.
He said: “The Triple Lock has been crucial in helping pensioners keep pace with the current cost of living, but the latest Spring Statement exposed a growing fault line in the system.
“With the full New State Pension rising to £11,973 in April, and the Personal Allowance frozen at £12,570 until 2031, more retirees are edging dangerously close to paying income tax on their State Pension.”
The Triple Lock has helped the State Pension keep pace with the sharp rise in living costs seen in recent years. However, critics argue without increases to the Personal Allowance, some of those gains may effectively be clawed back through taxation.
Mr Lee warned even a small tax bill could have a noticeable impact on pensioners who rely primarily on their State Pension to cover everyday expenses.
“For pensioners who rely mainly on their State Pension to cover everyday essentials, even a small tax bill could make a noticeable difference to their finances,” he said.
He also urged retirees and those approaching retirement age to review their finances and consider ways to manage their income more effectively.
Those on lower incomes may want to check whether they qualify for Pension Credit, which can top up weekly income and unlock access to additional support such as help with housing costs, Council Tax and heating bills.
The Department for Work and Pensions (DWP) estimates more than 700,000 pensioners are entitled to Pension Credit, but just not claiming it.
Some older people think because they have savings or own their home they would not be eligible for the means-tested benefit, but an award of just £1 per week is enough to unlock other support.
Meanwhile, people who are still working part-time could consider making additional pension contributions, while those planning for retirement may benefit from reviewing how ISAs, workplace pensions and other investments fit into their overall income strategy.
Mr Lee said taking steps early could help pensioners maintain financial stability.
“By preparing today, pensioners give themselves the best chance to ensure their income keeps pace with costs and maintain a sense of financial security,” he added.
New State Pension payment rates 2026/27
Full New State Pension
- Weekly: £241.30 (from £230.25)
- Four-weekly pay period: £965.20
- Annual amount: £12,547
Full Basic State Pension
- Weekly: £184.90 (from £176.45)
- Four-weekly pay period: £739.60
- Annual amount: £9,614
Other State Pension rates
- Category B (lower) Basic State Pension – spouse or civil Partner’s insurance: £110.75 (from £105.70)
- Category C or D – non-contributory: £110.75 (from £105.70)
Full details on Additional State Pension, Widows Pension, increments and Invalidity Allowance can be found on GOV.UK.
New Pension Credit rates
Standard minimum guarantee
- Single: £238.00 (from £227.10)
- Couple: £363.25 (from £346.60)
Additional amount for severe disability
- Single: £86.05 (from £82.90)
- Couple (one qualifies): £86.05 (from £82.90)
- Couple (both qualify): £172.10 (from £165.75)
- Additional amount for carers: £48.15 (from £46.40)
State Pension and tax
Guidance on GOV.UK states: “You pay tax if your total annual income adds up to more than your Personal Allowance. Find out about your Personal Allowance and Income Tax rates.
Your total income could include:
- the State Pension you get – Basic or New State Pension
- Additional State Pension
- a private pension (workplace or personal) – you can take some of this tax-free
- earnings from employment or self-employment
- any taxable benefits you get
- any other income, such as money from investments, property or savings
Check if you have to pay tax on your pension
Before you can check, you will need to know:
- if you have a State Pension or a private pension
- how much State Pension and private pension income you will get this tax year (April 6 to April 5)
- the amount of any other taxable income you’ll get this tax year (for example, from employment or state benefits)
You cannot use this tool if you get:
- any foreign income
- Marriage Allowance
- Blind Person’s Allowance
Use this online tool at GOV.UK to check if you have to pay tax on your pension. The full guide to tax when you get a pension can be found on GOV.UK here.
