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2d ago

State Pension Rise Likely to Push Many Pensioners Into Income Tax

A likely 3.9% triple‑lock increase will be finalised at the Autumn Budget after September’s CPI and the Chancellor lays out how people who rely only on the state pension will be protected.

Caption: This is a photo of coins on a letter about state pension. See PA Feature FINANCE Retirement. WARNING: This?picture?must only be used to accompany PA feature FINANCE Retirement.?PA Photo.?Picture?credit should read:?Alamy/PA. NOTE TO EDITORS: This?picture?must only be used to accompany FINANCE Retirement. Photographer: Alamy Provider: Alamy/PA Source: PA
State pensioners with no other income will be exempt from paying tax - and the Government will set out how it plans to do this at the Budget (Photo: Getty Images)
The triple lock is causing problems for the Government (Photo: Jacques Durocher/Getty)
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Overview

  • ONS earnings figures published on Tuesday showed average weekly pay rose 3.9% for May–July, making the earnings measure the probable trigger for next April’s triple‑lock uprating.
  • A 3.9% rise would add about £9.40 a week to the full new state pension, raising it to roughly £13,036 and moving many recipients above the £12,570 personal allowance.
  • That shift would create small income tax bills for some pensioners — estimates range from around £90 to several hundred pounds a year depending on individual circumstances.
  • The Government has pledged that people whose only income is the state pension will be protected but has not published the rules and analysts warn any narrowly drawn exemption would cover only a small fraction of pensioners and be hard to administer.
  • Economists and fiscal watchdogs say the triple lock and a frozen personal allowance drive up long‑term costs and could prompt calls for reform, tighter fiscal choices at the Autumn Budget or further pressure on retirement policy.