Pensioners To Get £575 State Pension Boost Next April But Millions Face New Tax Grab, Rachel Reeves Confirms

Millions of UK pensioners will receive a significant boost to their income next April, but this increase comes with a warning.

Chancellor Rachel Reeves has confirmed that while the state pension will grow by £575 per year, millions of retirees may soon be required to pay income tax for the first time due to frozen tax thresholds.

State Pension To Increase Under Triple Lock

The rise is a result of the government’s continued commitment to the triple lock. This policy guarantees that the state pension increases each April based on the highest of:

• September inflation
• Average earnings growth (May–July)
• 2.5% minimum guarantee

Because wages rose by 4.8%, next year’s pension increase will match this figure.

New Weekly Pension Rate

The full new state pension will increase from £230 to £241 per week, giving retirees an additional £575 annually.

Frozen Tax Thresholds Will Push Millions Into Paying Tax

Rachel Reeves also confirmed that income tax thresholds will remain frozen until 2030. This freeze means pension increases will gradually push more retirees into paying tax.

When Will Pensioners Start Paying Tax?

The personal allowance—the amount you can earn before paying income tax—remains at £12,570.

If the state pension rises by the minimum 2.5% in April 2027, it will reach £12,862, crossing the tax-free threshold.

This means:

• Around 13 million pensioners receiving the full state pension will begin paying income tax from 2027.
• Pensioners with both a state pension and private pension will pay even more tax starting April 2026 due to rising pension income.

Expert Advice On Managing Retirement Income

Financial experts stress the importance of smart income planning as tax pressures increase.

Tips From Retirement Specialists

James Norton, from Vanguard Europe, suggests:

• Withdraw from cash savings and general investment accounts first, allowing ISAs and pensions to grow tax-free for longer.
• When taking money from pensions, only withdraw what you genuinely need to avoid unnecessary tax bills.

Concerns About The Triple Lock’s Sustainability

While the triple lock boosts pension income, some experts believe it may become too expensive for the government in the long run.

What Experts Say

• David Brooks from Broadstone notes that rising pension costs will intensify debates about the future of the triple lock, especially as inflation remains high.
• Mike Ambery from Standard Life warns that the ageing population will increase pressure on public finances since today’s workers fund pension payments.

Despite concerns, both experts acknowledge that the rise is reassuring for older adults who rely heavily on the state pension during ongoing cost-of-living challenges.

How Much State Pension You Can Receive

The exact amount you get depends on your National Insurance (NI) record.

Key NI Requirements

• 35 qualifying years → Eligible for the full new state pension
• Years spent raising children or providing care may also count as NI credits
• If you have fewer than 35 years, you may purchase voluntary NI contributions
• 30 years of NI contributions are needed for the full basic state pension
• You need at least 10 years on your NI record to qualify for any state pension

The upcoming £575 state pension increase will provide welcome financial relief to millions of retirees. However, the decision to freeze income tax thresholds until 2030 means that many older adults may soon be paying tax on their pension income—some for the very first time.

While the triple lock remains valuable for protecting living standards, its long-term sustainability continues to spark debate.

Pensioners should review their income-withdrawal strategies carefully to avoid unnecessary tax bills as financial pressures evolve.

FAQs