The triple lock formula provides a floor of 2.5% increases, meaning the rate will rise to at least £236 in April 2026 and £241.90 in April 2027.
All state pensioners born after 1953 face being punished by HMRC letter
A warning has been issued for new State Pension claimants who are “guaranteed” to be targeted by HMRC in 2027 thanks to the rising Triple Lock metric. The new state pension is “guaranteed” to exceed the tax threshold in 2027 under the policy, experts warn.
The Department for Work and Pensions ( DWP ) state pension rises by the Triple Lock, a metric which was introduced by former Liberal Democrats and Conservative Party coalition government pensions minister Sir Steve Webb.
And Sir Steve, now a partner at a top law firm, says because the triple lock formula provides a floor of 2.5% increases, meaning the rate will rise to at least £236 in April 2026 and £241.90 in April 2027.
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The April 2027 rate is £12,578 per year, just above the £12,570 tax threshold. This could mean hundreds of thousands of pensioners are taxed on just £8 per year, with a tax bill of £1.60. If tax-free personal allowance then rise by CPI but the state pension rises by more, then this situation will continue indefinitely.
He warned: “A combination of an increasing state pension and frozen tax thresholds means we will soon be in the nonsensical situation where the new state pension will be just a few pounds above the income tax threshold.
“This means that people whose only income is the standard new state pension will be dragged into income tax. Long gone are the days when retirement meant no longer having to deal with the tax office.”
It means millions of new state pension claimants, who are born after 1951 if they’re a man and 1953 if they’re a woman, face a HMRC letter demanding tax in just two years’ time.
The government will need to make “difficult decisions” to rebuild fiscal buffers given the UK’s ageing population, the International Monetary Fund (IMF) has said, highlighting the state pension as one potential area for reform. In its latest update on the UK’s economy, the IMF suggested that an economic recovery is underway, with growth projected at 1.2 per cent in 2025 before gaining momentum next year.