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THE state pension is set to rise by £562 for millions next April as experts issue a tax warning.
Under the triple lock policy the state pension goes up each year by either inflation, 2.5% or average earnings growth – whichever is the highest figure.
Today, figures from the Office for National Statistics (ONS) showed that total pay including bonuses for the three months to July was 4.7%, which is likely to be the figure used for the annual increase.
The new flat rate state pension – which is for those who reached pension age after April 2016 – is expected to increase to £241.05 a week.
This marks an increase of £10.65, and will see the total yearly payment rise to £12,534.60.
That is an increase of £561.60 compared to now.
Meanwhile, the old basic state pension is expected to reach to go up by £184.75 a week, marking an increase of £431.60 a year.
Steve Webb, partner at pension consultants LCP said:“The standard rate of the new state pension is creeping ever closer to the frozen personal tax allowance.
“Indeed, we know for certain that someone who has no other income aside from the new state pension will be a taxpayer come April 2027. “
“It is already the case that nearly three quarters of all pensioners pay income tax, and the ongoing freeze in tax thresholds coupled with steady rises in the pension will drag more and more into the tax net”.
In May 2024, then Chancellor Jeremy Hunt said the income tax personal allowance would be frozen at £12,570 until 2028.
The freeze was first put in place in 2021.
In her first Budget in October that year, Chancellor Rachel Reeves had been widely expected to extend the freeze beyond 2028.
However, she confirmed the Government would increase the thresholds in line with inflation from this date.
