Probable Increased Rates for Pensions and Benefits in 2026/27

26th October 2025

The September 2025 inflation rate in the UK was 3.8%, marking a significant decrease from the 6.7% rate recorded in September 2023.

This lower inflation figure will influence the uprating of pensions and benefits in the 2026-27 financial year.

State Pension Increase
Under the triple lock system, the state pension increases by the highest of:
CPI inflation (Consumer Prices Index)
Average earnings growth
2.5%

Given that earnings growth was 4.8% in the year to July 2025, the state pension will rise by 4.8% in April 2026.

New State Pension: From £230.25 to £241.30 per week

Old State Pension: From £176.45 to £184.90 per week

This increase brings the annual new state pension to approximately £12,548, just £22 below the personal income tax allowance of £12,570. Consequently, more pensioners may become liable for income tax.

Benefits Uprating
Inflation-linked benefits (such as Universal Credit, tax credits, and disability benefits) are typically uprated in April based on the CPI inflation rate for the previous September. With the September 2025 CPI at 3.8%, benefits are expected to increase by 3.8% in April 2026.

This adjustment aims to help recipients maintain their purchasing power amid rising living costs.

Potential Tax Implications
The 4.8% rise in the state pension could push some pensioners' incomes above the income tax threshold of £12,570. This situation may lead to an increase in the number of pensioners subject to income tax, as their income surpasses the tax-free allowance.

While pensions are set to receive a 4.8% increase in April 2026, benefits will see a 3.8% rise. The higher pension increase may result in more pensioners becoming liable for income tax, highlighting the ongoing discussions about the sustainability of the triple lock system.