The UK’s state pension is projected to rise to £13,000 next year, potentially surpassing the current tax-free personal allowance of £12,570, raising questions about affordability and fairness. While pensioners relying solely on the state pension may still avoid income tax under new rules, the government has yet to clarify how these adjustments will be implemented. With the personal allowance frozen until 2031, the financial strain on public funds from the triple-lock system continues to spark debate over whether it remains sustainable. Details on how tax exemptions for low-income pensioners will be applied remain unspecified.
Wage growth – used to set triple-lock pension – slows to 3.9%, meaning state pension should hit £13,000 next year‘Costing billions’: is the pensions triple lock a lifeline or simply unaffordable?If the state pension rises to £13,000 next year, it will probably breach the UK’s tax-free personal allowance (currently £12,570) – the amount you can earn before paying income tax.However, pensioners who don’t receive any other income should still be exempt from paying tax if the state pension exceeds the personal allowance.In the 2025 Budget the government announced the personal allowance would be frozen at its current level up to April 2031.It also announced that pensioners whose sole income is the basic or new state pension would not have to pay small amounts of tax via simple assessment from 2027/28 if the new or basic state pension exceeded the personal allowance from that point. To date the government has not published any further details of how this is to be done. Continue reading...
