State Pension forecast to reach £13,000 and pass the tax-free allowance

The full new State Pension is on course for around £13,000 from April 2027, above the frozen £12,570 Personal Allowance

The full new State Pension is on course to rise to around £13,000 a year from April 2027, according to forecasts based on this year's inflation and earnings figures. That would take it above the Personal Allowance, which is frozen at £12,570 until 2030/31. For the first time, someone with a full new State Pension and nothing else would owe a small amount of income tax. Separately, HMRC has been writing to some pensioners about refunds of around £70 on workplace pension contributions.

Key facts: full new State Pension £241.30 a week (£12,548 a year) in 2026/27. Forecast around £13,000 from April 2027. Personal Allowance frozen at £12,570 until 2030/31. Triple lock: highest of CPI, earnings growth or 2.5%. HMRC letters about refunds of around £70 are genuine but check before responding.

How the triple lock sets the figure

The State Pension rises each April by the highest of September's CPI inflation, average earnings growth over the summer, or 2.5%. August CPI was 3.1% and earnings growth is running above that, so a rise of at least 3.5% looks likely. On £12,548 that is roughly £13,000.

The basic State Pension for those who retired before April 2016 is £184.90 a week and stays well under the allowance.

What tax would pensioners pay

Someone with only the full new State Pension and no other income would owe tax on the amount above £12,570. If the pension is £13,000, that is £430 taxed at 20%, or about £86 a year. HMRC cannot take tax off the State Pension at source, so it would usually collect it through a tax code on any private pension or, failing that, through a simple assessment letter.

Anyone with a private pension on top is already paying tax on the excess, so for them it is a slightly higher bill, not a new one. Marriage Allowance still lets one spouse transfer £1,260 of unused allowance to a basic-rate partner, worth up to £252 a year, and can be backdated four years.

What it means for you

If you receive a letter from HMRC about a refund of around £70 on workplace pension contributions, it is likely genuine. Some pensioners paid contributions that did not attract the tax relief they were due. HMRC letters come by post, give a reference number and never ask you to click a link to claim. Check the letter against the guidance at gov.uk before acting on it.

If you are on a low income, check Pension Credit. It tops income up to £238.00 a week for a single person and £363.25 for a couple, and unlocks other help.

Information only, not personal advice. Pensions are a regulated area.