Thousands more retirees will be forced to pay income tax on their state pension as April 2025 increases come into force, new analysis has revealed.
The full "new" state pension has risen to £11,973, pushing an estimated 650,000 more pensioners across the tax threshold in 2025-26.
This latest increase has brought the state pension dangerously close to the frozen £12,570 tax-free personal allowance.
Britain's pension system means over 2.6 million people already receive a state pension above the "personal allowance" limit - but the 4.1 per cent pay rise this April will drag hundreds of thousands more across the threshold.
Thousands more retirees will be forced to pay income tax on their state pension as April 2025 increases come into force
GETTYIncome tax thresholds were frozen until 2027-28 under the previous Conservative government, and Chancellor Rachel Reeves has since committed to maintain this freeze.
At the same time, the "triple lock" ensures the state pension rises by the highest of inflation, wage growth or 2.5 per cent each year.
The combination of the "deep freeze" and triple lock helped to push an extra 2.5 million pensioners into the tax net during the Conservatives' 14 years in power.
This trend means millions more retirees will be liable for tax bills in the next decade.
Sir Steve Webb, a former Pensions Minister now at pension consultants LCP, said: "The long-term freeze in the tax threshold, combined with some substantial cash increases in the state pension in recent years, has brought millions of pensioners into the tax net for the first time since they retired.
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Millions of pensioners have been brough into the tax net for the first time since they retired, Sir Steve Webb said
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"The combined increases in April 2023, 2024 and 2025 amount to a rise of nearly a quarter in the state pension while the tax threshold has remained frozen."
Separate analysis by The Telegraph found that around 249,000 retirees were already paying at least £1,000 of tax on their state pension income before April 6.
Some 10,700 paid over £2,000 in tax.
The state pension is paid to nearly 13 million retirees, with around 4.2 million on the new state pension introduced in 2016.
The rest receive the old state pension, with the full "basic" element rising to £9,175 a year.
Jon Greer, of wealth management firm Quilter, said: "Millions of pensioners are now teetering on the edge of a tax cliff as the state pension creeps ever closer to the frozen personal allowance.
'Millions of pensioners are now teetering on the edge of a tax cliff,' Jon Greer warned
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"With the Office for Budget Responsibility forecasting a 4.6pc triple lock increase in April 2026, the full new state pension would rise to £240.85 a week, just below the personal allowance of £12,570.
"That would leave retirees with barely any headroom before becoming liable for income tax. By the following year, the state pension alone could push them over the threshold.
"This will create a strange scenario where pensioners may soon pay tax simply for receiving the full amount they've been promised."
A Treasury spokesman said: "We are committed to help our pensioners live their lives with dignity and respect, which is why we have frozen fuel duty and increased the state pension to leave pensioner couples up to £88 better off a month."
