State pension to rise 4.7% in April: what you will get and why more pensioners will pay tax

The state pension will rise by 4.7% next April, after this week’s earnings figures confirmed that wage growth, rather than inflation or the 2.5% floor, will set the triple lock for the third year running. The full new state pension will increase from £230.25 to £241.05 a week, or £12,535 a year, and the full old basic pension from £176.45 to £184.75.

The increase is worth about £562 a year to someone on the full new pension, and will cost the Treasury about £6.5bn. The exact figure will be confirmed at the budget, but the government has said it remains committed to the triple lock for this parliament, and the earnings figure published on Tuesday is the one used in the calculation.

Not everyone receives the full amount. The new state pension, paid to those who reached pension age after April 2016, requires 35 qualifying years of national insurance contributions, and about 40% of recipients get less than the full rate because of gaps. Anyone with fewer than 35 years can usually buy missing years at a cost of about £907 each, which at current rates pays for itself within four years of claiming. The deadline for filling gaps back to 2006 passed in April 2025, but years from 2019 onwards can still be bought.

The rise also brings a growing number of pensioners into income tax. The personal allowance has been frozen at £12,570 since 2021 and will remain so until at least 2028. From April the full new state pension alone will be £12,535, just £35 below the threshold. Anyone with any other income at all, including a small private pension, part-time earnings or savings interest above the allowance, will pay tax at 20% on the excess.

“Next year is the last year in which the full state pension sits under the allowance, and only just,” said Dr Imran Siddiqui, a pensions economist at the Institute for Fiscal Studies. “By April 2028 it will be above it. That means the state will be paying a pension with one hand and taxing it with the other, and millions of people who have never filled in a tax return will be receiving a simple assessment letter from HMRC. It is not a scandal, but it is going to be a shock.”

HM Revenue and Customs collects tax on the state pension not by deducting it at source, which it cannot do, but by adjusting the tax code on any private pension or by sending a bill after the end of the tax year. Pensioners whose only income is the state pension and small savings will not receive a letter unless their total income exceeds the allowance, but those close to the line should check their savings interest, which banks now report automatically.

Pension credit, the top-up for the poorest pensioners, will also rise by 4.7%, taking the guarantee level to about £238 a week for a single person. The Department for Work and Pensions estimates that about 700,000 eligible households do not claim it, forgoing an average of £3,900 a year and, crucially, the other benefits it unlocks, including the winter fuel payment, free TV licences for the over-75s and help with council tax. A claim can be backdated three months.

The increase will be paid from the first full week of April. Pensioners do not need to do anything to receive it.