"Average Earnings Growth" and triple lock

hugheskevi

Worth remembering that there were already 2,632,164 pensioners as at May 2025 receiving State Pension in excess of £13,000 p/a. So whatever is done will apply to a large number of people from day 1.

If PAYE on State Pension was going to the be the answer, I suspect that would have been in the Budget document as it is the obvious thing to do. Given PAYE is not specifically mentioned, my money would be on a simplification, for example, DWP deducting 20% of any payment above Personal Allowance automatically. That would be akin to using a code of 1257L W1 - used when you’re paid weekly and 1257L M1 - used when you’re paid monthly to automatically remove 20% of any payment in excess of Personal Allowance.

Secret2ndAccount

DWP Keep 20% from any SP over £12,570 and send it to HMRC. If no other income, then sorted.   If people have other income, let those providers, together with the tax code, sort it out, as they already have to do.

Dazed_and_C0nfused

Secret2ndAccount said:

DWP Keep 20% from any SP over £12,570 and send it to HMRC. If no other income, then sorted.   If people have other income, let those providers, together with the tax code, sort it out, as they already have to do.

Unless you are Scottish resident.  Why should they have to have more tax deducted than is due?

Nothing is ever simple these days with income tax!

BlackKnightMonty

Rachel Reeves confirms if you receive the SP only, and it takes you over the personal allowance, you will not have to fill in a self assessment and you will not pay the income tax over the allowance. For the remainder of this parliament.

https://x.com/martinslewis/status/1994166357500346460?s=46&t=wjgj9AHysRwn3YQi4vJFdw

JoeCrystal

So basically anyone with high SERPs/2SP and deferred as it's only source of income is going to be a winner. Silvertabby's friend must be so happy at the moment if it is only source of income! 😁

Ayr_Rage

JoeCrystal said:

So basically anyone with high SERPs/2SP and deferred as it's only source of income is going to be a winner. Silvertabby's friend must be so happy at the moment if it is only source of income! 😁

The interview by ML of RR to me inferred that it would only apply to the NSP as it was mentioned that the triple lock is predicted to take that over the basic allowance in 2027.

Once again clarification is needed.

Silvertabby

JoeCrystal said:

So basically anyone with high SERPs/2SP and deferred as it's only source of income is going to be a winner. Silvertabby's friend must be so happy at the moment if it is only source of income! 😁

Stand by for another U turn confirming they mean State pensioners on JUST the new single tier State pension.  I really don't think they intend that my friend ('old' State pension of £24K due to high rates of SERPS/SP2 and deferral at the old, much more generous, rate of 10%) should be tax exempt !    

Eldi_Dos

That is good news. HL's backlog must be dropping while Waitrose Cellar's is propably growing.

tooldle

Ayr_Rage said:

JoeCrystal said:

So basically anyone with high SERPs/2SP and deferred as it's only source of income is going to be a winner. Silvertabby's friend must be so happy at the moment if it is only source of income! 😁

The interview by ML of RR to me inferred that it would only apply to the NSP as it was mentioned that the triple lock is predicted to take that over the basic allowance in 2027.

Once again clarification is needed.

My understanding is the same

SnowMan

SnowMan said:

Re the issue of the full new state pension being more than the personal allowance from April 2027 this was in the budget

https://assets.publishing.service.gov.uk/media/6926eb102a37784b16ecf525/E03444720_Budget_2025_Web_Accessible.pdf

4.167 State Pension and Simple Assessment – The government will ease the administrative burden for pensioners whose sole income is the basic or new State Pension without any increments so that they do not have to pay small amounts of tax via Simple Assessment from 2027-28 if the new or basic State Pension exceeds the Personal Allowance from that point. The government is exploring the best way to achieve this and will set out more detail next year.

Rachel Reeves has now confirmed to Martin Lewis that someone who is in this situation, that is they have a state pension that takes them over the personal allowance but no other pension, won't during the course of this parliament have to pay the small amount of tax from the state pension moving above the personal allowance in April 2027. 

https://x.com/martinslewis/status/1994166357500346460?s=46&t=wjgj9AHysRwn3YQi4vJFdw

Still leaves lots of questions

1. What happens for someone who receives a new state pension with a protected payment (of whatever size), but no other pension, will they have tax to pay? 

2. What if someone receives the old basic state pension and with SERPS/S2P that takes them above the personal allowance and they have no other pension, will they have to pay tax?

3. What happens for someone who receives a full new state pension, but has no other pension, but has £800 in dividend income or £7,000 in savings income. What tax write off will occur for them? 

4. What happens for someone whose only income is state pension, but has a SIPP but has taken no taxable income from that in the year in question. Will they have tax to pay i.e is it based on having no other pension rather than having no other taxable income from another pension. And if its based on just having another pension how will they be identified as having a SIPP by HMRC? 

I think they will have to do the tax calculation, and then set a maximum amount of tax that will be written off, for those in receipt of a state pension only and with no other private pension income. The maximum could be 20% of the difference between the new state pension and the personal allowance. 

Note if the current parliament ends in August 2029 then the April 2027 increase will push the new state pension above the personal allowance and then there will be two further increases in April 2028 and April 2029. So could perhaps be talking about an amount of tax of say £200-£300 per person per year being written off by the end of the parliament, so an extra winter fuel payment for those in this category.