The Personal Allowance has been fixed at £12,570 since 2021Linda Howard Money and Consumer Writer and Kieran Isgin Money & Lifestyle writer
02:33, 25 Oct 2025
The Autumn Budget could bring major pension changes(Image: Getty Images)
The UK Government has said it remains “committed to supporting pensioners” and giving them the “dignity and security they deserve in retirement” after Lib Dem MP Dr Al Pinkerton asked if an assessment has been made of the “potential merits of increasing the Personal Allowance” for those over State Pension age.
Earlier this year, the Labour Government confirmed the Personal Allowance will remain frozen at £12,570 until April 2028. Under the Triple Lock guarantee, the full New State Pension will be worth £12,547 next year – just £23 away from the income tax threshold.
However, in the written response to the Surrey Heath MP, Treasury Minister Dan Tomlinson said that the UK Government “keeps all taxes under review as part of the policy making process” and added that Chancellor Rachel Reeves “will announce any changes to the tax system at fiscal events in the usual way”.
The next fiscal event is the Autumn Budget, due to be announced in Parliament on November 26, reports the Daily Record. The Treasury Minister explained: “Through our commitment to protect the Triple Lock, over 12 million pensioners benefitted from a 4.1 per cent increase to their Basic or New State Pension in April 2025.
“Over the course of this Parliament, the full yearly rate of the new State Pension is expected to increase by around £1,900 based on the Office for Budget Responsibility’s latest forecast.
“The Personal Allowance – the amount an individual can earn before paying tax – will continue to exceed the basic and full new State Pension in 2025/26. This means pensioners whose sole income is the full new State Pension or basic State Pension without any increments will not pay any income tax.”
Under the Triple Lock system, both the New and Basic State Pensions rise annually in accordance with whichever proves highest among average annual earnings growth from May to July (4.8%), the CPI inflation rate in the year to September (3.8%), or 2.5 per cent. Additional State Pension components and deferred State Pensions climb each year alongside the September CPI figure.
A rise of 4.8 per cent would mean those receiving the full New State Pension get £241.30 per week, whilst those on the maximum Basic State Pension would get £184.90 per week. The Secretary of State for Work and Pensions (Pat McFadden) must by law conduct an annual review of the State Pension and benefits, with the results to be revealed in November.
The anticipated 4.8 per cent rise means individuals getting the full New State Pension could get £241.30 per week, or £965.20 every four-week pay period – around £12,548 annually.
Those receiving the full Basic State Pension could witness their weekly payment climb to approximately £184.90, £739.60 every four-week pay period – roughly £9,615 annually. It’s crucial to bear in mind that the amount of State Pension one receives is dependent on their National Insurance contributions.
To be eligible for the full New State Pension, you need approximately 35 years’ worth of contributions, although this may vary if you were ‘contracted out’. The uprating will be a welcome increase for most pensioners, however, it will result in more elderly people paying tax in retirement.
Claire Trott, Head of Advice at St. James’s Place, explained: “The UK CPI figures confirm that, as expected, next April’s State Pension rise will be determined by average earnings (which topped 4.8% in the three months to July), meaning pensioners are set for a substantial uplift of over £550 annually. However, this rise is something of a double-edged sword.
“While the boost will be welcomed by many, it also pushes the New State Pension to just below the personal Allowance, and risks nudging many more people into paying tax on any other additional income they have. As a result, someone with additional income of £10,000 will effectively only see an increase in their take home income of just shy of 2.3 per cent due to the additional taxation, which could result in unexpected tax bills for unassuming pensioners.”
Full New State PensionWeekly: £241.30 (from £230.25)Four-weekly pay period: £965.20Annual amount: £12,547Full Basic State PensionWeekly: £184.90 (from £176.45)Four-weekly pay period: £739.60Annual amount: £9,614State Pension and tax
Guidance on GOV.UK states: “You pay tax if your total annual income adds up to more than your Personal Allowance. Find out about your Personal Allowance and Income Tax rates.
Your total income could include:
the State Pension you get – Basic or New State PensionAdditional State Pensiona private pension (workplace or personal) – you can take some of this tax-freeearnings from employment or self-employmentany taxable benefits you getany other income, such as money from investments, property or savingsCheck if you have to pay tax on your pension
Before you can check, you will need to know:
if you have a State Pension or a private pensionhow much State Pension and private pension income you will get this tax year (April 6 to April 5)the amount of any other taxable income you’ll get this tax year (for example, from employment or state benefits)
You cannot use this tool if you get:
any foreign incomeMarriage AllowanceBlind Person’s Allowance
Use this online tool at GOV.UK to check if you have to pay tax on your pension. The full guide to tax when you get a pension can be found on GOV.UK here.