UK state pension set to exceed tax-free allowance for first time

The UK state pension is projected to rise above the tax-free personal allowance for the first time, potentially creating a new income tax liability for millions of pensioners. Official earnings data released on Tuesday indicated that the triple lock mechanism will likely trigger a significant increase in April 2027. The Office for National Statistics reported that average weekly earnings grew by 3.9% between May and July. This figure is a key component of the triple lock, which mandates the state pension rises by the highest of 2.5%, inflation, or earnings growth. With current inflation forecasts below this level, the earnings figure is expected to determine the pension increase. Based on this data, the full new state pension is projected to rise to approximately £13,036 for the 2027-28 financial year. This would exceed the £12,570 income tax personal allowance threshold. The basic state pension for pre-2016 retirees is expected to rise to around £10,010, remaining below the threshold. The government has previously stated that pensioners whose sole income is the state pension will not be required to pay tax on it, even if it rises above the personal allowance.