State pension holders look set to gain from a 3.9% increase linked to wage growth, lifting the state pension to about £13,000 next year. That level matches the triple-lock formula, which ties increases to earnings, prices or wages, whichever is highest. At roughly £13,000 the state pension would also clear the current tax-free personal allowance of £12,570, a point that matters for how much tax some pensioners might pay.
According to Business | The Guardian, the slower pace of wage growth this year triggered a smaller rise than some earlier forecasts, but still enough to push the state pension above the personal allowance threshold. The government has said pensioners whose only income is the basic or new state pension will be protected from small tax bills through simple assessment from 2027/28 onward. The Treasury also confirmed the personal allowance will stay frozen at £12,570 until April 2031.
Key Facts
- The triple-lock pension rise is set at 3.9%, tying the increase to wage growth.
- The state pension is expected to reach £13,000 next year.
- The personal allowance stays frozen at £12,570 up to April 2031.
- Pensioners with only state pension income will be protected from small tax bills from 2027/28.
- Wage growth, used to set the triple lock, slowed to 3.9%.
What happens next?
The government has not yet published details of how the tax protection for single-income pensioners will operate after 2027/28, leaving a gap between announcement and implementation. With wage growth slowing to 3.9%, the triple-lock rise stays in place for now, but the personal allowance freeze means more pensioners could face income above the tax-free threshold over time. The 2025 Budget already signalled that the allowance would remain at £12,570 until 2031, so the state pension crossing that line is likely to affect an increasing number of retirees.
Because the personal allowance is frozen while the state pension climbs, the Treasury’s reassurance about simple assessment only covers those whose sole income is the basic or new state pension. Pensioners with additional savings, private pensions or work income remain liable for tax in full. That split explains why the headline figure of £13,000 matters even though most single-income pensioners will be told they owe nothing.
Who is affected?
The change mainly affects state pension recipients, especially those whose only income is the basic or new state pension. When the state pension rises to about £13,000 it clears the £12,570 personal allowance, which would normally trigger a tax bill. Under current rules most single-income pensioners are still exempt from paying tax on that portion, and the government has promised further protection through simple assessment from 2027/28. However, that protection does not extend to pensioners with additional income from savings, private pensions or work, who remain fully taxable.
For now the key question is timing. The rise to £13,000 is expected next year, but the detailed tax rules will only be confirmed once the government publishes its full plan. Until then, pensioners with mixed incomes have no clarity on how the interaction between the rising state pension and the frozen personal allowance will affect their tax position.
What We Know — and What We Don’t
Verified by the source:
- The triple-lock rise is set at 3.9%, based on wage growth.
- The state pension is projected to reach £13,000 next year.
- The personal allowance is frozen at £12,570 until April 2031.
- Pensioners whose sole income is the basic or new state pension will be protected from small tax bills via simple assessment from 2027/28.
- The government has not yet published full details of how this tax protection will work.
Still unconfirmed:
- The exact date next year when the £13,000 level takes effect.
- The mechanism the government will use to apply simple assessment exemptions.
- How many pensioners will be affected by the state pension exceeding the personal allowance.
- Whether mixed-income pensioners will receive any additional relief.
Why it matters: Because the personal allowance is frozen while the state pension climbs, the interaction between the two determines how many retirees face a tax bill for the first time, even if most single-income pensioners are formally protected.
What to watch: Details of the simple assessment protection and the Treasury’s wider fiscal plan for the allowance freeze, which officials have yet to release.