State Pension set to exceed tax-free allowance in 2027

Summarised from 4 outlets · Updated 28 Oct, 06:00 · Archive

The full new State Pension is projected to rise above the current £12,570 personal allowance for the first time in April 2027.

The full new State Pension is projected to increase by 3.9% from April 2027 under the triple lock mechanism, taking the weekly payment from £241.30 to £250.70 and the annual total to approximately £13,036. This will mark the first time the full new State Pension exceeds the current £12,570 personal allowance, the amount someone can earn in a tax year before paying Income Tax.

The Government is expected to announce in the Budget 2026 how it will protect pensioners relying solely on State Pension income from paying Income Tax. According to reports, ministers are considering raising the tax-free threshold for low-income pensioners to £13,036, matching the projected annual value of the full new State Pension.

Such a move could shield almost one million pensioners from Income Tax and would cost around £200 million a year by the end of the decade. However, the threshold increase would not apply to all pensioners. Those with additional income from private pensions, savings interest or other taxable sources could still face an Income Tax bill.

Under the triple lock, the State Pension increases each April by whichever is highest of inflation, average earnings growth or 2.5%. The projected 3.9% increase reflects earnings growth, one of the three measures used to determine the annual rise.

How it is being reported

• What the Budget means for pensioners as State Pension set to hit new limitMillions of pensioners are waiting to see whether Chancellor John Healey will announce a major change to the tax-free personal allowance in the Budget 2026.Gazette & Herald · 28 Oct, 04:52
• What the Budget means for pensioners as State Pension set to hit new limitMillions of pensioners are waiting to see whether Chancellor John Healey will announce a major change to the tax-free personal allowance in the Budget 2026.Wiltshire Times · 28 Oct, 04:52
• What the Budget means for pensioners as State Pension set to hit new limitMillions of pensioners are waiting to see whether Chancellor John Healey will announce a major change to the tax-free personal allowance in the Budget 2026.This Is Wiltshire · 28 Oct, 04:52
• What the Budget means for pensioners as State Pension set to hit new limitMillions of pensioners are waiting to see whether Chancellor John Healey will announce a major change to the tax-free personal allowance in the Budget 2026.Swindon Advertiser · 28 Oct, 04:52

In this story: Chancellor John Healey · United Kingdom

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