State pensioners at risk of paying more tax because of one crucial change | Personal Finance | Finance

Hundreds of thousands of pensioners will be pushed into paying income tax as the state pension increases to £11,973. It is estimated that 650,000 retirees who have additional income as well as their state pension will cross the frozen income tax threshold of £12,570 in 2025/26 due to the increase and the rise has been described as creating a “retirement tax” for millions.

The increase is guaranteed by the “triple lock” system, which ensures pensions rise by inflation, wage growth or 2.5 per cent, depending on which is highest.

The full new state Pension will rise from £221.20 to £230.30 per week, which equates to £921.20 every four weeks.

Annual payments will rise from £11,502 to £11,975.60 over the 2025/26 financial year while those on the basic state pensionwill see their weekly payments increase 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.

Therefore, anyone with an additional income of £50 or more per month – on top of their state pension – could face a tax bill next year.

Someone receiving the full rate of the Basic State Pension on £9,175 a year would need to have an additional income of £3,395 before the personal tax allowance has been used – an extra £283 each month.

Full state pension – how much you get

• 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 – how much you get

• Weekly payment: £176.45 (from £169.50)
• Four-weekly payment: £705.80 (from £678)
• Annual amount: £9,175 (from £8,814)

Not all those on the state pension will get the rise, around 453,000 British nationals who live abroad have had their state pension payments frozen from the point at which they left the UK, which means they will not benefit from a rise in the triple lock.

Retirees living in countries which do not have a reciprocal agreement with the UK such as Canada, Australia and New Zealand, will also not benefit from a rise in the state pension next week. The International Consortium of British Pensioners (ICBP) advocates on behalf of around 453,000 expats affected by ‘frozen pensions’ and is behind the ‘End Frozen Pensions’ campaign.