Updated

Updated · The Guardian · Sep 12

British Chambers of Commerce Urges UK to Scrap Pension Triple Lock Over £154 Billion Bill

Updated

Updated · The Guardian · Sep 12

British Chambers of Commerce Urges UK to Scrap Pension Triple Lock Over £154 Billion Bill

Q: With state pensions breaching tax-free allowances in 2026, will millions of retirees suddenly face unexpected tax bills next year?

Not suddenly, and not for most retirees. But some pensioners are very likely to face small tax bills in 2026/27 if the full new state pension rises above the frozen £12,570 personal allowance, as current forecasts suggest. The key point is that the state pension is already taxable in law; it is just usually low enough that people with no other income owe little or no tax. If the full new state pension rises to about £13,050 a year next April, that would put it roughly £480 above the allowance. At the basic 20% rate, that implies a tax bill of around £95 a year for someone receiving the full amount and having no other taxable income. For many pensioners, this will not come as a separate surprise bill because HMRC normally collects tax through PAYE on a private pension or earnings. The main uncertainty is for people whose only or main income is the state pension, because tax is not deducted from it at source. In those cases, HMRC may issue a Simple Assessment after the tax year ends. HMRC has said such letters for 2025/26 will start going out from August 2026, with payment generally due by 31 January 2027. There is still an unresolved policy question. Ministers have previously indicated that pensioners relying solely on the state pension would not be made to pay tax, but experts at LCP say the government has not explained how that would work in practice. Until ministers clarify that, millions will not face immediate bills, but a significant minority could.

1 articles · Updated · The Guardian · Sep 12

Fresh pressure on the UK’s pension policy came from the British Chambers of Commerce, which said the state pension triple lock should be scrapped and savings redirected to tackle youth unemployment.
£154 billion is the estimated state pension bill this year, according to the Institute for Fiscal Studies, which said spending is already £16 billion a year higher than it would have been without the triple lock.
12 million-plus pensioners benefited from this year’s 4.8% rise, with the full new state pension increasing to £241.30 a week and the full basic pension to £184.90.
The policy has delivered rises of 10.1% in 2023, 8.5% in 2024, 4.1% in 2025 and 4.8% in 2026, prompting warnings from the OBR and other thinktanks that volatility has made it far costlier than first expected.
28 October is the next key date, when Chancellor John Healey could signal changes; legally, ministers need only raise the state pension in line with average wages, not maintain the full triple lock.

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The Guardian1d ago

British Chambers of Commerce Calls to Scrap UK State Pension Triple Lock Amid £154bn Cost Estimate

Could scrapping the controversial triple lock this October finally shift billions in wealth from retirees to struggling young workers?

With state pensions breaching tax-free allowances in 2026, will millions of retirees suddenly face unexpected tax bills next year?

Will the Chancellor's upcoming budget secretly phase out the triple lock to save the UK from a looming fiscal crisis?

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1 total

Left100%

The Guardian1d ago

British Chambers of Commerce Calls to Scrap UK State Pension Triple Lock Amid £154bn Cost Estimate

British Chambers of Commerce Urges UK to Scrap Pension Triple Lock Over £154 Billion Bill

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