The full New State Pension is set to increase from £221.20 to £230.30 per week – however the personal tax-free allowance will be frozen until 2028
State Pension payments are set to see a 4.1% increase from today, in line with the earnings element of the Triple Lock arrangement. However, the tax-free Personal Allowance will remain at £12,570 until 2028.
It’s estimated that by the end of 2024, 64% of senior citizens, approximately 8.1 million pensioners, will be paying tax on their pension income, often due to additional income from workplace or private pensions supplementing their State Pension.
Despite the Personal Allowance freeze ending in 2028, someone receiving the full New State Pension will get £11,975.60 in the financial year 2025/26, falling just short of the £12,570 allowance by £595, a difference close to £50 a month. The full New State Pension is set to rise from £221.20 to £230.30 per week, equating to £921.20 every four weeks.
This means that annual payments will increase from £11,502 to £11,975.60 over the 2025/26 financial year.
Similarly, those receiving the full Basic State Pension will see their weekly payments rise from £169.50 to £176.45, or £705.80 every four-week payment period. This will result in annual payments increasing to £9,175.40 over the 2025/26 financial year.
It’s important to note that additional State Pension elements, including deferred State Pensions, will rise by the September CPI figure of 1.7 per cent. The current full New State Pension is valued at £11,502 this year, leaving only £1,068 before the personal tax threshold is breached.
Therefore, anyone with an additional income of £89 or more per month – on top of their State Pension – could be hit with a tax bill next year. When the annual sum rises to £11,975.60 next year, this leaves just £595 – roughly £50 per month – before the £12,570 personal allowance is exceeded.
Someone receiving the full rate of the Basic State Pension currently gets £8,814, leaving just £3,756 before the personal tax threshold is reached, equivalent to an additional income totalling £313 per month. Over the 2025/26 financial year, this will rise to £9,175, leaving £3,395 before the personal tax allowance has been used – an extra £283 each month.
Complete State Pension rate increases
Full New State Pension
- Weekly payment: £230.25 (from £221.20)
- Four-weekly payment: £921 (from £884.80)
- Annual amount: £11,973 (from £11,502)
Full Basic State Pension
- Weekly payment: £176.45 (from £169.50)
- Four-weekly payment: £705.80 (from £678)
- Annual amount: £9,175 (from £8,814)
To check your own future State Pension payments, use the online forecasting tool on GOV. UK.
