Tax news · June 2026
The state pension keeps rising under the triple lock, but frozen allowances mean more pensioners now pay tax on it. Here is what it means and what to do.
The state pension increased again this April under the triple lock, the promise that it rises each year by the highest of price inflation, average earnings growth or 2.5 per cent. That is welcome for pensioners, but it has an awkward side effect. Because the personal allowance, the amount you can earn before paying Income Tax, has been frozen at 12,570 pounds, the rising state pension is moving closer to that line, and for some pensioners it now means paying tax on their pension for the first time.
The triple lock has pushed the full new state pension up steadily, and with the personal allowance frozen, the gap between the two has narrowed. A pensioner whose only income is the full new state pension is still just within the allowance for now, but anyone with even a modest private pension or other income on top can find part of their income taxed. As the state pension continues to rise against a frozen allowance, more pensioners will be drawn into paying tax each year.
This affects people at or approaching state pension age, particularly those with a private or workplace pension, savings income or part time earnings on top of the state pension. It also matters for anyone building up their National Insurance record, because the amount of state pension you get depends on your years of contributions, and gaps can reduce it.
There are two sides to this. First, protect the pension you will receive by checking your National Insurance record for gaps, because filling missing years, often through voluntary contributions, can be one of the best value financial decisions you ever make. Second, manage the tax on your retirement income by arranging how and when you draw private pensions and savings, using both partners' allowances where you are a couple, and making the most of ISAs, where the income is tax free and does not count against the allowance.
Our view is that the triple lock is genuinely valuable and the rises are good news, but the quiet interaction with the frozen personal allowance is poorly understood, and some pensioners are surprised to find they owe tax in retirement when they never expected to. The answer is not to worry but to plan, because retirement income is very plannable. Checking your National Insurance record before you retire, and arranging your income across pensions, savings and ISAs once you have, can make a real difference to both how much pension you get and how much tax you pay on it.
We check your National Insurance record, advise on whether voluntary contributions are worthwhile, and help you arrange your retirement income tax efficiently across pensions, savings and ISAs. Book a free call back and we will look at your plans.
The state pension is taxable, but tax is only due if your total income exceeds your personal allowance of 12,570 pounds. With the allowance frozen and the pension rising, more pensioners with other income now pay some tax.
Check your National Insurance record for gaps and consider paying voluntary contributions to fill missing years, which is often excellent value. The pension you receive depends on your years of contributions.
We will check your National Insurance record and arrange your income tax efficiently. Book a free call back and we will help.