State pensioners born after 1951 will enjoy an extra year of tax-free pension payments from the Department for Work and Pensions (DWP), provided they have no other income sources. This temporary relief means these individuals won’t face immediate income tax charges on their state pension.
Martin Lewis, the well-known financial expert and broadcaster, explained on his MoneySavingExpert website that the State Pension is set to rise by approximately 4.8% next April. This increase is due to the government’s “triple lock” guarantee, which adjusts pensions by the highest of 2.5%, inflation, or average earnings growth.
Based on recent earnings data up to July, the anticipated rise will be 4.8%, leading to the full new State Pension increasing from £230.25 to about £241.30 per week. For those receiving the old State Pension (those who retired before April 2016), payments will increase from £176.45 to roughly £184.90 per week.
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Lewis highlights that this adjustment will bring the full new State Pension to approximately £12,548 annually, placing it just below the current personal allowance—the amount you can earn tax-free each year without paying income tax. Since State Pension income is taxable, this means that starting the following year, unless personal allowances change, pensioners relying solely on the full new State Pension may begin to pay income tax as their pension rises and personal allowances remain frozen.
HM Revenue & Customs (HMRC) clarified that pension calculations involve a combination of rates—one week at the old rate and 51 weeks at the new rate used in their annual assessments.
MoneySavingExpert adds that if the 4.8% increase proceeds as expected, the annual taxable amount for 2026/27 would be approximately £12,536.55, meaning pensioners with no other income and on the full new State Pension will not be liable for income tax next year. This effectively grants them an additional year of tax-free pension income before tax implications begin.