Payments for the state pension will increase in April
State pensioners could get a surprise tax bill(Image: Getty)
State pensioners should check whether they will face a fresh tax demand this year. Payouts are set to rise once more in April, courtesy of the triple lock.
This mechanism guarantees that payments increase in accordance with whichever proves highest among three benchmarks: average earnings growth, inflation levels, or a baseline 2.5 per cent. Last year’s earnings figure was the largest of the three metrics, with benefits climbing 4.8 per cent this April. This uplift will push the full new state pension from its present £230.25 weekly rate up to £241.30 weekly, whilst the full basic state pension will rise from its current £176.45 weekly figure to £184.90 weekly.
Jennifer Critchton, senior wealth planner at Killik & Co, warned that the income boost might pull certain recipients into paying higher tax bills. She explained: “From April this year, the full new state pension will rise to £241.30 per week (around £12,548 per year).
“This brings many pensioners above the personal allowance (£12,570) once any private pension or other income is taken into account.” The triple lock policy means that the full new state pension will certainly exceed the personal allowance threshold from April 2027 onwards.
Labour ministers previously said that people whose sole income is the state pension, without supplementary payments, wouldn’t be required to pay small income tax amounts when their earnings surpass the personal allowance.
However, the Government has yet to outline precisely how this will operate. Looking towards the April 2027 rise, Ms Critchton said: “Earnings growth once again looks set to be the driver of the triple lock for April 2027.
“With the personal allowance still frozen, this means that from the 2027/28 tax year, the increase expected under the triple lock will take many pensioners over the tax-free threshold from state pension income alone. The continued freeze on income tax thresholds, adopted by both the current and previous Governments, is a subtle but increasingly significant form of fiscal drag, and its effects are beginning to be felt.”
She discussed how pensioners can use the extra funds from this year’s state pension increase. The financial planner said: “If the higher state pension payment isn’t immediately needed for regular expenses, using it to rebuild an (interest-earning) easy access cash buffer or saving into an ISA can help keep money flexible for later-life expenses such as home adaptations or care costs.”
As the triple lock continues to push up the state pension bill for the Government, one question repeatedly being asked is when ministers will need to reform it. Ms Critchton said: “Over time, it’s likely the triple lock will be revisited because it’s simply too expensive to sustain.
“Its design can lead to sharp increases in pension spending during periods of volatility, particularly in years marked by spikes in inflation or earnings growth. A new system which better smooths over these outlier years (such as multi-year averages) or the removal of the 2.5 per cent floor may be on the cards.”
Key policy changes on the horizon
One change that those planning for their retirement should take into account is the increase in the state pension age from this April. It will move up gradually from the current 66 to reach 67 by April 2028.
Legislation has also been put in place for a further increase to 68 between 2044 and 2046. A review of the state pension age published in 2023 suggested an earlier shift to 68, but the Conservative Government at the time did not adopt this proposal.
Labour announced in 2025 that there would be another review of the state pension age.
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