The Department for Work and Pensions (DWP) has responded to growing concerns about the Personal Tax-Free Allowance staying frozen while the State Pension continues to rise under the triple lock system.
Many pensioners are now asking: Will the tax-free limit be increased to match the rising State Pension?
What Is the Personal Tax-Free Allowance?
The Personal Allowance is the amount of money you can earn each year without paying income tax. Currently, this limit is £12,570 and has remained unchanged since 2021. It is frozen at this level until April 2028 under a decision made by the previous government.
Why Are Pensioners Affected?
Due to the triple lock, the State Pension increases each year by whichever is highest:
- 2.5%
- Inflation
- Average earnings growth
From April 6, the new full State Pension went up by £472 a year, based on earnings rising by 4.1%. This brings the weekly payment to £230.25, or £11,973 a year—just £600 below the tax-free allowance.
The full basic State Pension is now £176.45 a week, which totals around £9,175.40 a year, comfortably under the threshold.
However, for pensioners with additional income sources such as private pensions or savings interest, this increase pushes many over the tax-free limit, meaning they now owe income tax.
What the Government Says
Pensions Minister Torsten Bell addressed the issue after being questioned by Sir Ashley Fox, MP for Bridgwater, on whether the government plans to raise the allowance in line with pension increases.
Mr Bell confirmed that:
“Currently the Personal Allowance is higher than the full basic and new State Pensions. Pensioners with no other income will not pay any income tax.”
He added that the previous decision to freeze the threshold still stands until 2028, but the new government chose not to extend the freeze any further during its first budget.
Triple Lock Still Protected
The government has reassured that it remains fully committed to protecting the triple lock, which is expected to raise spending on the State Pension by £31 billion over the current Parliament term.
This will increase pensioners’ annual income by up to £1,900. Around 12 million pensioners are expected to benefit from this rise.
While the Personal Tax Allowance will remain frozen at £12,570 until 2028, the DWP insists that most pensioners who only receive the State Pension will stay below the tax limit. However, those with extra income may find themselves crossing the threshold and having to pay tax.
The government says it’s focused on supporting pensioners through the triple lock system and providing financial dignity in retirement—but for many, the question of rising tax burdens alongside increasing pension income remains a concern.
FAQ’s
Will the personal tax allowance rise with the State Pension?
No, the personal tax-free allowance will remain at £12,570 until 2028, as set by the previous government. It is not currently linked to State Pension rises.
How much is the new full State Pension in 2025?
From April 6, 2025, the new full State Pension increased to £230.25 a week, or £11,973 per year, due to a 4.1% rise linked to wage growth.
Will pensioners have to pay tax on their pension?
Only pensioners whose total income—including private pensions or savings—exceeds £12,570 will need to pay income tax.
What is the triple lock on pensions?
The triple lock ensures the State Pension increases each year by the highest of 2.5%, inflation, or average wage growth.
Is the government planning to change the tax allowance rules for pensioners?
There are no current plans to raise the tax-free allowance for pensioners. The threshold remains fixed until 2028.
