Millions of older people in the UK are set to receive a larger State Pension pay rise next April than initially anticipated, following an upward revision of a key figure used in the Triple Lock policy by the Office for National Statistics (ONS). Data released on Tuesday confirmed an increase in total wage growth, including bonuses, for the May to July period, rising from 4.7 per cent to 4.8 per cent. This revision has significant implications for State Pension recipients.

Under the Triple Lock mechanism, the New and Basic State Pensions are increased annually based on the highest of three measures: average annual earnings growth from May to July, the Consumer Price Index (CPI) inflation rate in the year to September, or 2.5 per cent. With the revised earnings growth now standing at 4.8 per cent, this figure is highly likely to be the one used for the upcoming increase. The September CPI, due to be published on October 22, is currently tracking lower, with the most recent August CPI figure at 3.8 per cent, making earnings growth the probable determinant.

Should the 4.8 per cent earnings growth be confirmed, individuals on the full New State Pension would see their weekly payment increase to £241.30, up from £230.25. Those on the maximum Basic State Pension would receive £184.90 per week, an increase from £176.45. This translates to an annual amount of £12,547 for the full New State Pension and £9,614 for the full Basic State Pension, with four-weekly payments reaching £965.20 and £739.60 respectively. Additional State Pension elements and deferred State Pensions are linked to the September CPI figure.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, noted that this slight revision in earnings growth would lead to a marginally higher increase for pensioners. She highlighted that while the final inflation figures are pending, average wages are expected to be the deciding factor, with confirmation anticipated in the forthcoming Budget. It is crucial to remember that the specific amount an individual receives depends on their National Insurance contributions, with approximately 35 years typically required for the full New State Pension, though this can vary if one was 'contracted out'.

An important consequence of the rising State Pension is its proximity to the Personal Allowance income threshold. An uprating of 4.8 per cent would bring the annual State Pension to £12,547, leaving just £36 before the Personal Allowance of £12,570 is exceeded. This raises concerns that more pensioners could be pushed into paying income tax in retirement. The Personal Allowance is currently frozen at £12,570 until April 2028, a policy confirmed by the Labour Government. Chancellor Rachel Reeves is expected to confirm the annual uprating at the Autumn Budget on November 26.

Guidance from GOV.UK clarifies that tax is payable if total annual income surpasses the Personal Allowance. This total income can comprise the State Pension (Basic or New), Additional State Pension, private pensions, earnings from employment or self-employment, taxable benefits, and other income like investments, property, or savings. To determine if tax is due on a pension, individuals need to know if they receive a State Pension or a private pension, the expected income from both for the current tax year (April 6 to April 5), and any other taxable income. Specific exclusions apply, such as foreign income, Marriage Allowance, or Blind Person's Allowance. Online tools and comprehensive guides are available on GOV.UK for checking tax obligations.