LONDON / RankWire.AI / – Britain’s full new State Pension has moved closer to exceeding the tax-free Personal Allowance after official pay data set the earnings benchmark at 3.9%. The Office for National Statistics said total pay grew 3.9% in the three months through July 2026. Regular pay increased 3.5%. The triple lock uses the highest of earnings growth, September inflation or 2.5% to determine the annual State Pension increase.
The full new State Pension currently stands at £241.30 a week for the 2026-27 tax year. Applying the 3.9% earnings benchmark produces a weekly figure of about £250.70. HM Revenue & Customs calculates annual taxable State Pension entitlement using one week at the old rate and 51 weeks at the new rate. On those figures, taxable entitlement totals about £13,027, around £457 above the £12,570 Personal Allowance.
The Personal Allowance remains fixed at £12,570 for the 2027-28 tax year. Government policy also keeps it at that level through the 2030-31 tax year. A 3.9% State Pension increase places the full new pension above that threshold under the HMRC calculation. State Pension income is taxable, although tax does not come directly out of State Pension payments. A person’s actual tax liability depends on total taxable income and available allowances.
Earnings benchmark puts tax threshold in focus
The Office for National Statistics reported that annual consumer price inflation rose to 3.1% in August, from 2.9% in July. That figure does not determine the inflation element of the triple lock. The calculation uses September CPI, which the statistics agency plans to publish on October 21. The 3.9% earnings figure therefore remains one confirmed component of the calculation, alongside the 2.5% minimum. The final April 2027 pension increase cannot be set until September inflation data becomes available.
The UK government addressed the emerging tax issue in Budget 2025. It said pensioners whose sole income is the basic or new State Pension, without increments, would not have to pay small tax amounts through Simple Assessment from 2027-28 if the pension exceeds the Personal Allowance. The government said it was examining how to implement that change and would provide further details. The measure specifically concerns pensioners relying only on qualifying State Pension income.
Tax treatment depends on total retirement income
HM Revenue & Customs treats State Pension payments as taxable income alongside other taxable sources. These can include workplace pensions, personal pensions, earnings, taxable benefits and income from investments or property. Where a pensioner also receives other income, HMRC can collect tax through an employment or private pension tax code. The tax position therefore differs for people with income beyond the State Pension. Existing guidance bases any liability on total taxable income after relevant allowances.
Not every retiree receives the full new State Pension because entitlement depends on an individual’s National Insurance record. Some people also receive protected payments above the standard new State Pension rate. The full basic State Pension under the older system currently pays £184.90 a week. The latest earnings data has nevertheless brought the full new State Pension and the £12,570 tax threshold into direct alignment as a policy issue. September inflation remains the final outstanding triple-lock measure for the April 2027 uprating.