The full state pension is projected to exceed £12,000 next year, approaching the income tax threshold by only £570.

Under the triple lock guarantee, the state pension increases annually based on either average wage growth, inflation, or 2.5 percent—whichever is highest. This rise will take effect on April 6, coinciding with the start of the tax year, and is typically confirmed in March. The increase is calculated using the Consumer Prices Index for the year to September or wage growth in the three months to July.

Currently, the full new state pension amounts to £221.20 a week—equivalent to £11,502.40 annually—while those who reached state pension age before April 2016 receive up to £169.50 a week from the basic state pension— or £8,814 a year.

With inflation at 2.2 percent based on the latest figures for the year to July, pensioners may see a more substantial increase because wages have risen by 4.5 percent in the three months to June. If next month’s wage growth surpasses 4.3 percent, the new state pension will exceed £12,000 by April. A 4.5 percent increase would elevate it to £231.15 a week, totaling £12,020 yearly, while the old state pension would rise to £9,211 annually.

Steven Cameron from the pensions firm Aegon commented, “While not yet certain, this gives the best indication yet of how much the state pension will increase next April under the triple lock, which the Labour government has confirmed will remain in place.”

“With the latest inflation figure near 2 percent, even with modest increases in the coming months, it’s highly likely that the increase will be based on earnings growth for July.”

This year saw an 8.5 percent state pension increase, following a 10.1 percent rise in April 2023.

The personal allowance—the income you can earn without paying tax—has been frozen at £12,570 since 2021 and will remain unchanged until 2028. Consequently, the number of pensioners paying tax has increased from 6.74 million in 2021-22 to 8.51 million in 2023-24, according to HM Revenue & Customs.

Steve Webb, a partner at consultancy Lane Clark and Peacock, estimates that an additional 400,000 pensioners with other income sources could be subject to tax if the state pension rises by 4.5 percent in April.

“Even a modest increase in the state pension next year could result in hundreds of thousands more pensioners paying income tax due to the prolonged freeze on tax thresholds. It will also push more people into higher tax brackets,” Webb stated.

“This will create further bureaucracy for individual pensioners and strain the tax administration system. It’s hard to believe that generating numerous accidental taxpayers is a cost-effective strategy.”

If the state pension rose by 4.5 percent in 2025-26 and by 2.5 percent in both 2026-27 and 2027-28, the new state pension would surpass the £12,570 tax-free threshold. If the personal allowance had kept pace with inflation, it would be £15,220 today.

The Resolution Foundation estimates that 8 million pensioners face an average annual tax increase of £960. Additionally, millions will lose the annual winter fuel payment, which has been removed for those not on pension credit.

Approximately 8.4 million households receive the winter fuel payment, but only 1.37 million people claim pension credit, available to those with an income of less than £218.15 a week.

An online calculator published by the government allows individuals to check their eligibility for pension credit and determine the amount they might receive—typically around £75 a week on average.

Cameron noted, “While next April’s state pension increase is expected to be higher than current inflation, any real-term gains will be significantly reduced by the elimination of the winter fuel allowance.”