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State pension likely to rise by 3.9% after key data released - but most will be taxed

Pension consultants LCP said only one in 16 retirees could qualify for the proposed tax exemption.

  • Millions of pensioners face potential tax bills next year as the new state pension is set to rise 3.9 per cent, pushing the standard rate above the £12,570 personal tax allowance for the first time.
  • The Government's triple lock formula triggers the highest of wage growth, inflation, or 2.5%, and latest earnings figures showing 3.9 per cent growth will likely determine the April increase.
  • Recipients can expect an annual increase of nearly £500, raising payments to around £250.70 weekly; those wholly dependent on the pension could face an income tax bill of around £91.40.
  • Analysis from LCP suggests proposed tax exemptions may only help one in 16 pensioners, and Work and Pensions Secretary Pat McFadden faces scrutiny as the Government has not yet explained how the exemption will function.
  • The final triple lock figure remains unconfirmed until October when September CPI is published; while The Bank of England forecasts inflation around 3.2 per cent, earnings growth currently remains the primary driver.
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State pension expected to rise by £488 a year – but millions face tax warning

Millions of pensioners could see the state pension rise by £488 a year in April, but the increase could push the new rate above the tax threshold.

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BBC News broke the news in London, United Kingdom on Tuesday, September 15, 2026.
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