DWP to confirm 2025/26 State Pension payments in days - what you need to know

Starting from April next year, pensioners will see a 4.1% increase in their New and Basic State Pensions, while additional components will rise by 1.7%, in line with the Triple Lock mechanism. This mechanism guarantees annual increases will be the highest of either average earnings growth at 4.1%, CPI inflation at 1.7%, or a set 2.5%.

Despite these upcoming increases, misinformation is circulating on social media due to a misleading video alleging that HMRC warned pensioners about a "£130 deduction to the monthly State Pension"; this claim is false. The Labour government has pledged to uphold the Triple Lock for the next five years.

In addition, the Personal Allowance will remain at £12,570 until the start of the fiscal year 2028/29. With the full New State Pension currently at £11,502 for the tax year 2024/25, it is projected to increase to £11,973 in 2025/26.

This means there's only a marginal buffer of just £1,068 below the tax threshold for the current year, and this will narrow even further to £597 for 2025/26. Although individuals receiving the full New State Pension aren't liable for income tax, any additional income from employment or private or work pensions may be taxed.

The majority of people have their taxes automatically deducted through PAYE for employment income and private pensions; however, those who do not pay in this way will receive a tax calculation from HMRC in the summer and must make payment by the following January, as stated in a report by the Daily Record, cited by The Express, reports Yorkshire Live.

There's been considerable speculation about the number of pensioners who will be subject to tax. However, it's important to note that out of the 12.7 million State Pensioners in the UK, nearly 8 million (62%) already pay some form of tax during their retirement.

This isn't a new phenomenon. With the 12th year of auto-enrolment in workplaces now underway, more people are set to benefit from increased income during retirement and will likely pay tax, typically deducted from their private pension.

Any tax paid in retirement is based on the amount of income earned above the threshold, not the total additional income. For example, if an individual has a total annual income of £13,000, they will pay tax on £430 - the amount above the £12,570 threshold.

The DWP will soon publish the full list of uprated State Pension and benefit payments. So far, only the New and Basic State Pension rates have been confirmed, not the additional elements (which are increasing by 1.7%).