Critics claim the controversial tax rules are unfair
08:27, 13 May 2026Updated 08:32, 13 May 2026
Chancellor Rachel Reeves has come under fire.(Image: Getty Images)
Experts warn hundreds of thousands more pensioners will barely feel any impact from the annual triple lock rise because of controversial tax rules.
The triple lock guarantees an increase to the state pension every year to match whatever is highest out of inflation, wage growth or 2.5%.
But more over-65s are will find themselves having to pay income tax this year because of frozen tax bands.
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Some commentators argue this makes the triple lock increase almost worthless to certain retirees who will lose a similar amount in tax.
The triple lock ensures payments rise each year to keep up with living standards but it has also resulted in hundreds of thousands more over-65s passing the personal allowance threshold. This is the point someone starts paying income tax.
The issue has been caused by successive governments keeping tax bands frozen since 2021.
Chancellor Rachel Reeves opted to keep them at the same level at last year’s Budget.
Ministers know this will result in more households being shifted into new bands as their incomes increase, brining in more tax revenue. This is known as fiscal drag, while critics label it a stealth tax.
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While those who only receive the state pension don’t currently have to pay, it only takes a modest private pension or small amount of interest from savings to pass the £12,570 threshold.
An extra 600,000 pensioners are expected to have to pay income tax in 2026/27 because of this policy.
Derence Lee, chief finance officer at Shepherds Friendly, said: “With the full new state pension rising to £11,973 from April, and personal allowance now frozen at £12,570 until 2031, more retirees are edging dangerously close to paying income tax on their state pension.
“The triple lock has played a vital role in helping pensioners keep pace with the high inflation seen in recent years.
“However, if the tax-free allowance remains frozen, some of the recent state pension increases could effectively be taken back through income tax.”
An Assistance for Seniors spokesperson said: “This is no longer a problem affecting only those with substantial pension pots.
“We are fast approaching a point where simply receiving the full state pension, alongside even a modest amount of savings interest, is enough to trigger a tax bill.”