Go to website<\/a><\/p>\nADVERTISEMENT<\/p>\n
A full state pension of \u00a312,534 would fill up 99.7 per cent of each individual\u2019s personal allowance, data from Standard Life shows.<\/p>\n
\u201cThe planned uplift will be some comfort for pensioners grappling with rising bills and the lingering effect of inflation on everyday essentials,\u201d said Mike Ambery, retirement savings director at Standard Life.<\/p>\n
\u201cHowever, a full new state pension will also be over 99 per cent of the personal allowance, currently frozen at \u00a312,570 until 2028 \u2013 by contrast, in 2021\/22 the new state pension was equivalent to 74 per cent of the allowance. This means pensioners will need just \u00a335.40 of other income before paying income tax.<\/p>\n
\u201cThe personal allowance rose fairly rapidly as a percentage of average earnings in the just over a decade before 2020, from 23.61 per cent in the 2007\/08 tax year to just under 45 per cent in 2020. Since 2020, a combination of freezes and inflation has seen this decline, meaning a greater percentage of income is taxable. <\/p>\n
\u201cFor pensioners paying the higher rate of tax, the value of the \u00a3561.60 rise will be eroded to around \u00a3337.\u201d<\/p>\n
Will the triple lock stay?<\/p>\n
The upcoming rise means the triple lock is likely to come under increasing scrutiny in political circles, while calls to raise the personal allowance will also resume.<\/p>\n
Pat McFadden, the new work and pensions secretary, earlier confirmed that the pensions Triple Lock promise will be honoured.<\/p>\n
\u201cThis Labour government is committed to maintaining the triple lock for the course of this parliament. It is estimated that will mean a rise in the state pension of around \u00a31,900 a year by the end of the parliament,\u201d he said.<\/p>\n
\u201cThat\u2019s a commitment from the Labour government to the UK\u2019s pensioners. It\u2019s something that we said we\u2019d do at the election and something that we will keep to.\u201d<\/p>\n
That comes at a difficult time for the chancellor to balance another argument ahead of the Budget, explained Rachel Vahey, head of public policy at AJ Bell.<\/p>\n
![\"The](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2025\/11\/GettyImages-2214408292.jpeg\")
The new secretary of state for the Department for Work and Pensions has said the triple lock will be honoured (Getty)<\/p>\n
\u201cThis puts the state pension above \u00a312,000 for the first time ever and perilously close to the frozen personal allowance,\u201d said Ms Vahey.<\/p>\n
\u201cThis poses a significant conundrum for Rachel Reeves and the Treasury. If, as is likely, the triple lock sees the state pension increase above the personal allowance of \u00a312,570 in April 2027 for the first time, then the government will come under increasing pressure to make a decision regarding either the personal allowance or whether it can sustain the triple lock as it has promised at least to the end of this parliament.<\/p>\n
\u201cRemoving the freeze on the personal allowance would come at significant cost to the Treasury at a time when the chancellor\u2019s fiscal headroom is already strained at best, while an overhaul of the triple lock would come with huge political risk before the next general election. Needless to say, it\u2019s a headache Starmer and Reeves could do without ahead of a crucial Budget in November, and economic and political pressure already beginning to swell both within the Labour Party and outside of it.\u201d<\/p>\n
The standard Personal Allowance is \u00a312,570, which is the amount of income you do not have to pay tax<\/a> on, the government website notes.<\/p>\nBeyond that figure, the basic tax rate would apply. That includes income from property, dividends, earnings or elsewhere.<\/p>\n
It\u2019s important to remember the tax would only be paid on the portion of income above the personal allowance threshold, not the entire amount.<\/p>\n
The numbers apply to the new state pension rather than the basic state pension, which is for those born before 1951 (men) or 1953 (women).<\/p>\n
\u201cThe Bank of England expects inflation to ease in the coming months, so that by the time we get to the state pension rise in April next year, this increase might be well ahead of annual price rises at the time,\u201d said Sarah Coles, head of personal finance at Hargreaves Lansdown recently.<\/p>\n
\u201cOf course, this is only part of the picture. Inflation has been particularly focused on household bills and food prices, which pensioners on lower incomes spend a larger proportion of their income on. It means many of those who rely heavily on the state pension will be holding their breath for the rise in the spring.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Your support helps us to tell the story From reproductive rights to climate change to Big Tech, The…\n","protected":false},"author":2,"featured_media":151158,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[138,246,111,139,69,244,245],"class_list":{"0":"post-151157","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-finance","10":"tag-new-zealand","11":"tag-newzealand","12":"tag-nz","13":"tag-personal-finance","14":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/151157","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=151157"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/151157\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/151158"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=151157"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=151157"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=151157"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
![\"Trading](\"https:\/\/static.independent.co.uk\/static-assets\/images\/mobile-stores\/Trading_212.svg\")
<\/p>\n