The new state pension will rise by £489 to £13,036 a year from next April, taking it above the tax-free personal allowance of £12,570 for the first time. To protect pensioners who rely solely on the state pension from paying income tax, the personal allowance for low-income pensioners will also rise to £13,036. The Chancellor, John Healey, confirmed the announcement in his Budget today.
Higher-Income Pensioners Still Face Tax
Millions of pensioners with higher incomes, including those with private pensions or receiving higher state pension amounts, will still pay income tax.
The state pension rise follows the Prime Minister's announcement that Labour plans to adjust the triple lock, which determines annual state pension increases, from April 2030. Under current rules, the pension rises by the highest of inflation, average wage growth, or 2.5%.
Triple Lock Changes and Future Increases
Under the proposed changes, the state pension would continue to rise annually by at least inflation or 2.5%, while still tracking average wages over time. The overhaul would help fund a new National Care Service in England.
For next year, the state pension will rise by 3.9% in line with wage growth. Someone on the full new state pension would receive £250.70 a week from next April, up from £241.30. The basic state pension would rise to £192.10 a week, up from £184.90, putting it at around £9,989 per year.
Impact on Pensioners
The state pension is based on National Insurance records, so individuals with gaps in contributions may receive less. Many on the old pension system receive additional top-ups through SERPS or the state second pension, and some receive higher amounts if they deferred their payments.
