Without changes to the personal allowance, the ‘triple lock’ is set to push pensioners into the taxpayer bracket.
The UK state pension guarantee is unlikely to be changed at the Autumn Budget but could be axed in the future.
The chancellor is already under significant strain after a reported U-turn on raising income tax.
Some UK pensioners could pay tax for the first time if further increases to the UK state pension push them over a key income tax threshold. This could become politically damaging for the chancellor, Rachel Reeves, as she prepares to deliver bad news to taxpayers in the coming Autumn Budget.

One way of stopping this unpopular outcome is to rethink the “triple lock” a policy that uprates state pension payments and that is becoming harder to finance in the current constrained fiscal climate.

Rachel Reeves is unlikely to scrap the triple lock on Nov. 26, especially as the government reportedly just reversed plans for raising income tax. Questions remain whether the UK government has the political firepower to solve its fiscal problems and keep a key cohort of voters onside.

AJ Bell’s head of public policy, Rachel Vahey, says the triple lock creates further problems for the Treasury.

“If, as is expected short of a policy intervention, the triple lock sees the state pension increase above the personal allowance of £12,570 in April 2027, then the government will come under increasing pressure to either unfreeze the personal allowance or consider whether it can stand behind its promise to sustain the triple lock for the rest of this parliament.”

Autumn Budget Income Tax Rise Now Under Threat
What Is the Pension Triple Lock?
The triple lock is a government guarantee that came into effect in 2011. It means the state pension is increased by the higher of the rise in the Consumer Prices Index, average earnings growth, or a minimum of 2.5%. In recent years, the inflation-linked uplift has attracted most attention, such as when pensioners enjoyed an increase of 10.1% in April 2023.

But as inflation has fallen, the focus has now moved to UK wage data.

Last month, labor market data from the Office for National Statistics showed that total UK employee pay including bonuses increased by 4.8% over the three months to July 2025. While CPI rose by 3.8% in September, this means the state pension income is rising faster than the cost of living.

Rises in the state pension are set once a year in the autumn, with the changes due to take effect in the following financial year starting in April. An announcement is expected on the 2026/2027 state pension in the coming weeks.

Will I Pay Tax on My State Pension Income?
A 4.8% rise would mean next year’s basic state pension payments will reach £241.05 a week, or £12,534.60 a year—a £561.60 uplift. The annual amount puts state pension payments within touching distance of the UK’s income tax personal allowance of £12,570. An uplift of just £35.40 would push pensioners into paying income tax at the Basic rate of 20% in the 2027/8 tax year. With the triple lock guaranteeing a minimum increase of 2.5% a year, that looks almost unavoidable without political intervention if current inflation and wage growth data trends continue.

The developments come as the chancellor, Rachel Reeves, readies her delayed Autumn Budget due on Nov. 26, and amid an earlier government commitment to review the UK’s retirement policies announced back in July. It also comes amid serious unrest within the corridors of power, where Keir Starmer has been battling to retain political support among his cabinet frontbenchers following sinking poll ratings.

Pensioners with no income other than the state pension do not have an income tax liability, as state pension payments amount to a lower figure than the £12,570 personal allowance. That is now expected to change due to the triple lock but it’s also because of a freeze in income tax rates and the income tax personal allowance. Because those thresholds aren’t moving upward, more people will gradually become liable for tax—a concept known as “fiscal drag.”

Experts say it’s highly unlikely the government would increase the personal allowance at a time when the Treasury is already battling to regain control of the public finances amid restless bond markets and competing spending priorities.

“Now is not the right time to be increasing personal allowances, and the Budget is not the time or place to be tinkering with the triple lock,” says Morningstar senior European market strategist Michael Field.

“The latter will likely be adjusted at some point, but certainly at a more opportunistic juncture, and quietly, without the fanfare that comes with Budget day.”

Pensioners Will Have to File Tax Returns
“If the chancellor holds tax thresholds where they are, state pensioners will find they fall above the tax-free threshold. That will mean they have to fill in a tax return,” says Mark Garnier MP, the Conservative member of parliament for Wyre Forest and shadow economic secretary to the Treasury.

“Under our policies, we were keen to avoid state pensioners having to do this, so we raised the tax thresholds each year to make sure they didn’t have to pay tax. Rachel Reeves now has the choice of raising the starting threshold, and helping not just pensioners, but every worker in the bottom deciles by hiking this [threshold].”

The opposition’s calls for action are likely to be resisted, however.

“Removing the freeze on the personal allowance would come at significant cost to the Treasury at a time when the chancellor’s fiscal headroom is already strained at best, while an overhaul of the triple lock would come with huge political risk before the next general election,” says AJ Bell’s Vahey.

“Needless to say, it’s a headache Starmer and Reeves could do without ahead of a crucial Budget in November with economic and political pressure building both within the Labour Party and outside of it.”

How Will the Budget Affect My Retirement?
Income tax and the state pension are not the only topics savers, investors, and retirees are keeping an eye on ahead of the chancellor’s crucial speech later this month. Alongside the controversy over its manifesto pledge not to increase income tax, VAT, or National Insurance, the government is reportedly mulling several other key policies that could affect the way that people plan for, save, and live in retirement.

Cash ISAs are reportedly in line for a contribution allowance change in a bid to encourage savers to invest in UK equities, and the inheritance tax gifting rules could be tightened. In a significant development for those who have utilized—or are hoping to utilize—the UK’s pension freedom rules, it’s also possible the government will reduce the amount of tax-free cash retirees can withdraw from their private pensions.

The tax relief provided by saving into a workplace pension via the salary sacrifice scheme could likewise be dramatically reduced. And for those for whom property plays a significant role, it’s worth keeping an eye out for potential changes to council tax, capital gains tax, and levies due on rental income.

For now, much of the government’s thinking has already been trailed in the press, which should limit “rabbit from the hat” surprises. But this approach may backfire for Reeves.

“From a market perspective, this approach can cut both ways. On the one hand, it reduces the risk of a nasty surprise that jolts sterling on Budget day,” says Richard Potts, economist at Bondford, in a note.

“On the other, it risks signaling indecision and political fragility—especially if the final measures appear shaped by short-term pushback rather than a coherent fiscal strategy. Traders will be alert to whether the final Budget feels like a carefully calibrated plan, or a reactive compromise shaped by polling and press headlines.”

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