Triple Lock Plus rule change as HMRC hands out £1,275 state pension boost
Everyone on the state pension is set to be £1,275 better off after a rule change by HMRC
Rishi Sunak confirms commitment to Triple Lock pensions
HMRC is set to hand out a £1,275 a year boost to pensioners if a planned 'triple lock plus' change is put into effect.
Currently, the personal allowance for income tax stands at £12,570 a year and this has remained frozen for several years.
This means that you can earn up to £12,570 per year ‘tax free’ before you start to become liable to pay 20 percent of your earnings on every £1 over that amount to HMRC.
But because of the ‘triple lock’ on the state pension, pensioners will soon find that they are hitting that tax threshold and begin to owe tax on their state pension income.
In an election sweetener, Rishi Sunak has promised to alter the personal allowance tax bands - but only for pensioners.
It means an immediate £1,000 boost for pensioners this tax year - with another £275 on top by the end of the decade.
The ‘triple lock’ means that state pensions must rise by either the same as average earnings or in line with inflation, or by 2.5 percent fixed, whichever of those three is highest.
Because of that, some state pensioners could find themselves paying tax on their income within a few years if the state pension - currently £11,502 per year - rises above the £12,570 threshold.
PM Rishi Sunak said: “I passionately believe that those who have worked hard all their lives should have peace of mind and security in retirement.
“Thanks to the Conservatives’ Triple Lock, pensions have risen by £900 this year and now we will cut their taxes by around £100 next year.
"This bold action demonstrates we are on the side of pensioners.”
Andy Wood, a tax expert at Crypto Tax Degens, said the change to the personal allowance threshold could be worth as much as £275 by the end of the decade if put in place.
"The pledge to provide a £275 tax boost to millions of pensioners is a development in taxation policy, particularly for pensioners. If implemented, this proposal could alleviate financial burdens on a substantial portion of the UK's elderly population.”
That makes the total £1,000 now with another £275 for pensioners down the line by 2029-2030.
