Chancellor John Healey is expected to announce an increase in the tax-free amount for low-income pensioners to £13,036 in his Budget statement on Wednesday, preventing them from being dragged into paying income tax.
The full new state pension will rise by £489 to £13,036 next April under the triple lock policy. However, the hike will push it above the frozen £12,570 personal allowance, which has been frozen at that level since 2021 and is due to remain until 2031.
Triple Lock Impact
The personal allowance will rise in line with increases in the state pension over the course of this Parliament, costing taxpayers £200 million a year by 2030, according to The Times.
Ministers have repeatedly promised they would prevent people whose only income is the state pension from being hit with income tax.
Prime Minister's Proposals
It comes as Prime Minister Andy Burnham has announced he will scrap the triple lock after the next General Election to help pay for his social care reforms. Under his proposals, the state pension would rise each year by inflation or 2.5%, with the automatic link to increases in average earnings dropped.
The triple lock policy sees payments rise by whichever is highest out of average earnings, inflation and 2.5%.
