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week to Friday 18 September 2026
In 2022 the government froze the personal allowance at £12,570. Every year since, the state pension has gone up and that threshold hasn't. This week the two lines finally crossed — and almost every headline you read about it stopped halfway through the story.
Here's the week, in plain English.
On Tuesday the Office for National Statistics published average earnings growth for May to July: 3.9%.
That matters because the triple lock takes the highest of September's inflation figure, that earnings number, or 2.5%. Earnings won comfortably, so 3.9% is almost certainly the uprating for April 2027.
In pounds, as Which? set out:
One honest caveat. This isn't formally confirmed until September's inflation figure is published in mid-October and the uprating is announced. Earnings should still win, but until then it's a very well-informed projection rather than a fact.
£13,036 is more than £12,570.
So from April 2027, the full new state pension sits above the income tax threshold on its own — before you add a workplace pension, savings interest, or any earnings at all.
A lot of people said this week that the state pension is "becoming taxable". It isn't, and Fidelity's Ed Monk made the point well: the state pension has always been taxable income. It has simply never been big enough to exceed the personal allowance before. The rule didn't change. The number caught up with it.
There is a promise attached. From April 2027, pensioners whose only income is the state pension won't pay tax on it, for the rest of this Parliament. Pensions Minister Torsten Bell restated it this week.
But Which? and the consultancy Lane Clark & Peacock read the actual wording, and it covers the basic or new state pension "without any increments".
Those three words do a lot of work. If you reached state pension age before 2016 you're on the old system, and most people on the old system have additional pension — SERPS, graduated retirement benefit — sitting on top of the basic. Those are increments. LCP's estimate is that around 6.5 million pensioners could fall outside the exemption entirely.
Steve Webb, the former pensions minister, called it a two-tier system: two people with identical incomes, one taxed and one not, purely because of when they retired.
AJ Bell's Rachel Vahey made the longer-range point. Even at the 2.5% triple-lock floor, run forward to April 2031, the state pension would sit almost £1,500 above the frozen allowance. This isn't a one-off quirk of a good earnings year. It's the new baseline, and the Chancellor is expected to explain how the exemption actually works at the Budget.
Two numbers this week, pointing in opposite directions.
On Wednesday, inflation rose to 3.1% in the year to August, up from 2.9% in July. The main driver was fuel — petrol rose more than 9p a litre in a single month, to the highest level since November 2022.
On Thursday, the Bank of England held rates at 3.75%, the sixth hold running. The interesting part is the vote: 6–3, and the three dissenters wanted rates up to 4%, not down. For most of the past two years the argument inside the Bank was about how quickly to cut. This week it was about whether to hike. The next decision is 5 November.
If you're a saver, there's a practical footnote. Moneyfacts pointed out that the Bank estimates around £300 billion is sitting in UK current and savings accounts earning nothing at all — roughly £12 billion a year of interest going uncollected, while the best easy-access accounts pay around 5%. That is the single highest-return fifteen minutes available to most households right now.
HMRC's annual savings statistics, published Wednesday, showed £135.7bn subscribed to adult ISAs in 2024-25 — up £32.7bn in a year, with cash ISA subscriptions alone up 37.5%. Total adult ISA holdings now stand at £952 billion.
Some of that is high interest rates making cash ISAs worth having again. Some of it is people getting ahead of what's coming in eighteen months.
From April 2027, under the announced ISA reforms, the cash ISA limit falls from £20,000 to £12,000 if you're under 65. Those aged 65 and over keep the full £20,000. The overall ISA allowance is unchanged at £20,000 — it's the cash slice being squeezed, to push money towards investing.
The change that got almost no coverage is the second one, which MoneyWeek picked up: from April 2027, interest earned on uninvested cash held inside a stocks and shares ISA faces a 22% charge.
What makes that sting is what platforms already pay. MoneyWeek found 46% of ISA providers pay zero interest on cash held on the platform, and 84% pay under 3%. So you may already be earning very little on that money — and from 2027, nearly a quarter of whatever you do earn goes to HMRC. If you have cash parked uninvested on an investment platform, it's worth knowing what rate it's on.
The Budget is on 28 October, the first under Prime Minister Andy Burnham with John Healey as Chancellor. The backdrop is difficult — government debt approaching £3 trillion, and economists suggesting fiscal headroom has shrunk to about a third of its spring level. Burnham has refused to rule out tax rises.
The Telegraph ran a preview of what's being briefed. Two items touch pensions: capping pension tax relief at 20% for higher-rate taxpayers, and another look at the 25% tax-free lump sum.
I'd treat both with real caution. Neither is announced or confirmed as under consideration. Tax-free cash in particular has been floated before virtually every Budget for over a decade and has never actually been cut. The people who lose money to Budget speculation are rarely the ones who waited.
It was Pension Awareness Week, which produced the most useful research of the week.
Check your state pension forecast. HMRC published research showing 6.9 million UK adults — one in eight — have never checked theirs. The worst age group is 45 to 54, which is precisely when it still matters, because that's when a gap in your National Insurance record can still be fixed. It's in the HMRC app and takes about two minutes.
Find out what your employer actually pays in. Which? found that 46% of people paying into a workplace pension don't know their employer's contribution rate. The spread between employers is enormous: 22% of the lowest earners get at least 6% from their employer, against 46% of the highest. Plenty of employers will match additional contributions and never mention it.
Track down anything you've lost. Which? also cited 3.3 million lost pension pots in the UK, worth £31.1 billion between them.
And if you're approaching the point of buying a guaranteed income, Which?'s annuity tables this week showed a healthy 65-year-old with a £100,000 pot being quoted between £6,705 and £8,120 a year depending on provider. That's a gap of roughly £1,400 a year, for life, for the same money.
Your state pension is going up by nearly £489 and crossing the tax threshold for the first time. The exemption meant to protect you has wording in it that may exclude millions of older pensioners. Rates are on hold with a hawkish edge. And the cash ISA allowance is coming down in eighteen months.
None of that is hidden. It's all published. It's just spread across four government websites and written to be boring.
The question none of it answers is the one that actually matters: what age can you afford to retire? That's what Calculate My Pension works out — it's the only UK tool I know of that gives you an affordable retirement age rather than a projected pot value. It's free to try.
Back next week.
This is general information, not financial advice. The 3.9% uprating is provisional until September's inflation figure is published in mid-October.
The Pensions Report. Every Friday, from Calculate My Pension. See all reports.
