A potential rise in the UK state pension next April, driven by the triple lock system, could see more than 1.5 million pensioners facing income tax bills for the first time, experts have warned.
With early forecasts pointing to a possible 5% increase, the full new state pension could jump from the current £230.25 to approximately £241.75 per week by April 2026. While this boost may seem like good news, it also brings many pensioners dangerously close to or over the income tax threshold, meaning thousands could receive their first-ever HMRC tax bill.
How the Triple Lock Impacts Pension Growth
The triple lock mechanism guarantees that the state pension increases each April by the highest of three factors: 2.5%, inflation, or average earnings growth. If earnings growth remains the highest—currently at 5.6% for the December 2024 to February 2025 period—it will likely determine the 2026 state pension uplift.
Amy Knight, a personal finance expert with NerdWallet UK, highlighted the potential implications. “A 5% rise in line with wage growth would see the full new state pension rise to nearly £241.75 weekly. That would tip many pensioners above the personal allowance, especially those with additional income streams.”
Tax Trouble Ahead for Retirees
Claire Trott, who leads the Retirement & Holistic Planning division at St. James’s Place, warned of the administrative burden this could create for pensioners unfamiliar with income tax obligations. “For retirees already receiving other pensions through PAYE, extra tax can be deducted automatically,” she explained. “But for those without other taxed income, they may be required to file a self-assessment tax return, which can be confusing and intimidating.”
She noted that older individuals, especially those unfamiliar with online tax systems, may find the process overwhelming. “In some cases, the cost of hiring someone to help file a return could exceed the benefit of the pension increase itself,” Trott said. “There needs to be a simpler system in place.”
Triple Lock Not Legally Guaranteed
While the Labour Party has pledged to maintain the triple lock during this Parliament, Trott cautioned that the policy is not enshrined in law and could be altered or scrapped with relative ease by future governments.
“This is a policy promise—not legislation,” she said. “If future governments decide to revise or remove it, the political fallout would be significant, but it’s still a possibility.”
Which Metric Will Decide the Rise?
While earnings growth currently looks like the frontrunner in determining the state pension rise, it’s too early to call. The relevant triple lock measure will be confirmed in the autumn using data from July to September. Although inflation sat at 2.6% as of March, the final figures used for the calculation are still months away and subject to change.
Trott summed up the uncertainty: “We still don’t know what the deciding metric will be. Earnings and inflation figures can shift dramatically between now and October.”
