The Conservatives are pledging a ‘triple lock plus’ for UK pensioners – here’s what it means

If re-elected, the Conservatives have pledged to introduce a “triple lock plus” that the party says would pull “millions” of pensioners out of paying tax. Their plan would ensure that pensioners’ tax-free personal allowance rises each year in line with the state pension.

This is something of a policy U-turn. It is just 14 years since the coalition government started to phase out higher personal allowances for older people, who used to be entitled to a greater income than under-65s before being liable for tax. It was a task that took until 2016 to complete and was generally welcomed as a simplification of the tax system.

But now, triple lock plus is the Conservatives’ response to a sharp rise in the number of pensioners being dragged into income tax. This is happening because of the government freezing the income tax personal allowance (the amount of income someone can have without having to pay tax on it) since 2021 until 2028. In the meantime, state pensions have risen significantly because of inflation.

As an example, for 2024-25 the state pension rose by 8.5%. The full rate of the new state pension is now £11,502 a year – nearly £1,900 more than just two years ago. Meanwhile, the tax-free personal allowance has remained fixed at £12,570. This means any pensioner with more than £1,068 of income from other sources this year will have tax to pay.

The state pension is paid gross (without tax deducted) but it is not – as pensioners may mistakenly believe – tax-free.

Tax due on the state pension is usually collected through pay-as-you-earn (PAYE) deductions out of other income from pensions or earnings. But, if PAYE is not an option, pensioners may get a “simple assessment” letter from HMRC shortly after the end of the tax year directing them to pay tax though the self-assessment system.

Triple lock plus aims to allay the growing alarm among pensioners facing these unexpected income tax bills by raising the allowance in tandem with pensions.

Under the triple lock, which has been in place since 2011, the basic and new (post-2016) state pensions usually increase annually by whichever is greater out of price inflation, the change in average earnings or 2.5%. Both Labour and the Conservatives have pledged to retain the triple lock if elected.

In the absence of the triple lock, legislation currently says state pensions should increase in line with earnings. The chart shows how the new state pension (the solid grey line) is currently about £400 a year higher than it would have been without the triple lock (the dashed grey line).

How the new state pension has increased compared with the income tax personal allowance. Jonquil Lowe

The chart also shows how the gap between the state pension and the income tax personal allowance (the solid black line) has been shrinking, especially since inflation took off in 2022. The dotted lines project what might happen in future.

Price inflation is forecast to come back down close to the government’s 2% target. So the chart assumes a modest rise in the state pension over the next three years of 2.5%. The result is that the gap would continue to shrink to almost nothing if the personal allowance remains frozen.

The impact of triple lock plus

Triple lock plus would prevent the further shrinking of the gap between the state pension and the personal allowance. It would enable pensioners to carry on getting around £1,100 a year on top of the full state pension before becoming taxpayers.

Work and pensions secretary Mel Stride has said triple lock plus would prevent “millions of pensioners being dragged into paying income tax”. However, the Institute for Fiscal Studies puts the figure at just “a few hundred thousand”.

Pensioners who already pay income tax would also benefit, since some of their income would shift out of the basic-rate band into the tax-free allowance. The table shows the tax saving over the next three years if the allowance rose by 2.5% a year.

Jonquil Lowe

There would be no additional tax saving for higher-rate taxpayers because the income level at which higher rate tax starts to be paid would remain frozen until 2028 at its current level of £50,270.

The Conservatives estimate that triple lock plus will cost £2.4 billion a year by 2029-30 and claim it can be funded out of existing policies to reduce tax avoidance.

But whether this is a good use of public money is a key question, given the current eroded state of the UK’s public services and high levels of poverty. It could be that even many pensioners feel there are more urgent priorities.