The state pension is set for a rise of up to about £575 a year from April 2026, but frozen tax thresholds mean many pensioners will be pushed closer to or into paying income tax on their retirement income. The boost comes via the triple lock, which delivers a 4.8% increase, while the personal allowance for income tax remains stuck at £12,570 until 2030.
How the £575 pension boost works
Budget 2025 confirms that the full new state pension will be uprated by 4.8% in April 2026 under the triple lock, using wage growth as the highest of the three measures. This translates into an increase of around £574–£575 a year for those on the full new state pension, taking it to roughly £12,547 a year, or about £241 a week.
People on the older basic state pension (pre‑2016 system) will see a smaller cash uplift of around £439–£440 a year, lifting a full basic pension to roughly £9,250–£9,300 annually. In both cases, the percentage increase is the same, but the absolute gain depends on which pension system and rate you are on.
Why a tax “trap” is looming
Because the personal allowance is frozen at £12,570 until at least 2030, the 4.8% rise pushes the full new state pension to just about £23 below that tax‑free threshold in 2026–27. Even a modest triple‑lock increase of 2.5% in April 2027 would then take the pension above the allowance, meaning pensioners with full new state pensions would owe income tax on part of their state pension alone.
Analysts estimate that hundreds of thousands more pensioners will be brought into the tax net over the next few years as a result of the combination of rising pensions and frozen thresholds, a process often called “fiscal drag.” Those with even small workplace or personal pensions will see more of that extra income taxed at 20% as the state pension uses up most or all of their personal allowance.
Key figures at a glance
| Item | 2025–26 (approx.) | From April 2026 (approx.) | What changes |
|---|---|---|---|
| Full new state pension (annual) | ~£11,973 | ~£12,547 | +£574–£575 a year |
| Full basic state pension (annual) | ~£8,810 | ~£9,249–£9,250 | +£439–£440 a year |
| Personal allowance (tax‑free) | £12,570 | £12,570 (frozen) | No change until 2030 |
| Gap between new pension & allowance | ~£597 | ~£23 | Nearly eliminated by 2026–27 |
SOURCE
What pensioners should do now
Pensioners should check their expected state pension for 2026–27 and add any workplace or personal pension income to see whether their total will exceed £12,570. If it does, planning ahead—such as adjusting pension withdrawal patterns, using ISAs for savings, or spreading income between tax years—can help manage the future tax bill.
