State Pension increase of £517 could push millions of pensioners into tax next April

Millions of older Brits are likely to start paying income tax over the next five years, with large increases in State Pension payments pushing more and more pensioners over their personal tax threshold. This is because more than 12 million people over the age of 66 could see their State Pension rise by over £1,000, thanks to the Labour Government's commitment to the Triple Lock.

The New and Basic State Pensions increase annually under the Triple Lock, in line with the highest of three factors: average annual earnings growth from May to July, the Consumer Price Index (CPI) inflation rate for the year to September, or 2.5 per cent. But thanks to widespread pay rises in response to years of high inflation, older Brits are set for another bumper pension increase.

The Office for National Statistics (ONS) latest data reveals that average regular earnings growth is currently at 4.5 per cent (including bonuses) in the three months leading up to June, making it the primary driver for the State Pension uplift in April. However, the figure that will be taken into account as part of the Triple Lock won't be released until September 10 and won't be officially confirmed until the Autumn Budget on October 30.

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A 4.5 per cent increase would see the full New State Pension rise from £11,502 per annum to £12,019 in 2025, edging it closer to the personal tax allowance threshold of £12,570. The personal allowance is set to remain frozen until 2028, meaning further increases under the Triple Lock will result in more pensioners paying tax in retirement.

Out of the 12.7 million individuals receiving the State Pension, approximately 8.1