The Chancellor John Healey (pictured) will deliver his first Budget in days. (Image: Getty)
Martin Lewis has issued a message about a key thing he’ll be looking out for in next week’s Budget about State Pensioners. John Healey will deliver his first Budget as Chancellor on Wednesday, October 28, and faces the difficult task of working within Britain’s constrained fiscal resources whilst looking for measures that boost economic growth. Mr Lewis, a personal finance guru and founder of MoneySavingExpert.com, says he will be looking for further detail about a scheduled change to the State Pension. The full rate of the new State Pension is currently £241.30 a week, though the amount you get may differ depending on various factors. These include: you were contracted out before 2016; the number of National Insurance qualifying years you have; and if you paid into the Additional State Pension before 2016, the GOV.UK website explains.
Under the triple lock commitment, the State Pension rises by one of three measures annually: wage growth; inflation; or 2.5% – whichever is highest. This week it was confirmed that the State Pension would rise by 3.9% when it’s uprated in April next year, based on wage growth figures for the May to July period of 2026, which were confirmed to outstrip inflation.
Years of increases mean from April, the annual rate for those with full entitlement will rise to around £13,040. It means for the first time the State Pension is higher than the £12,570 tax-free personal allowance, which has been frozen for more than five years.
It raised concerns that pensioners who had saved up all their lives and relied on the pension would ironically start to lose out due to the uprating. The Government confirmed that older people solely living off their State Pension wouldn’t be taxed on income in excess of the allowance. More information will be provided in the Budget, the Treasury said.
Mr Lewis included it in a list of things he’ll be keeping a close eye on. Writing on X, he said: “We now know someone who ONLY gets the full new state pension won’t pay tax. But it’s very important we understand the mechanism.
“For example, if someone has just £10 a year of other earnings, will they still have to pay tax? If so, that £10 of earnings will effectively cost them about £100 – the tax they’d pay without the exemption.”
A Treasury spokesperson said: “In line with the commitment made at Budget 2025, pensioners who only just the exceed the personal allowance will not have the administrative burden of paying small amounts of tax in this Parliament. The Chancellor will set out further details on how that commitment will be delivered at the Budget.”
Martin Lewis Issues Urgent State Pension Warning Ahead of Budget
Martin Lewis has issued a warning for State Pension recipients and people approaching retirement as attention turns to the government’s upcoming Budget. With millions of households facing pressure from everyday living costs, pensioners are being urged to understand how decisions on tax, benefits and retirement income could affect their finances.
The consumer finance expert has repeatedly encouraged people to check their entitlements rather than assume that the State Pension is the only support available to them. Ahead of a major fiscal announcement, that message is particularly important for older people living on fixed incomes, those with limited savings and households worried about rising bills.
The precise significance of any warning depends on the Budget measures being considered. Pensioners should therefore distinguish between confirmed government policy, proposals under discussion and speculation about possible changes.
For many retirees, even a relatively small adjustment to income or eligibility rules can make a meaningful difference to their monthly budget. Understanding the rules before changes take effect can help people avoid missing support they may be entitled to receive.
The tax warning pensioners need to understand
The main issue Martin Lewis wants clarified is what happens when the full new State Pension rises above the personal allowance for income tax.
The full new State Pension is currently £241.30 a week. Based on the projected 3.9% increase, it is expected to reach approximately £250.70 a week from April 2027, equivalent to around £13,036 a year.
That would exceed the standard personal allowance of £12,570, which is the amount most people can receive before paying income tax.
The government has previously committed to ensuring that pensioners whose only income is the State Pension will not face an administrative burden from small tax bills during the current Parliament. However, Lewis has stressed that the details of how this promise will work are important.
For example, what happens if someone receives the full State Pension but also earns a small amount from another source? Would that additional income trigger a tax liability that outweighs the money earned?
This is the kind of practical question Lewis wants the Chancellor to answer. A policy designed to protect pensioners could create confusion if people cannot easily understand whether they qualify.
Why the Budget announcement matters
Chancellor John Healey is due to deliver the Budget on October 28, 2026. Pension taxation is among the issues attracting attention ahead of the announcement.
The government is expected to explain how it intends to honour the commitment to protect pensioners who rely solely on their State Pension. The precise mechanism matters because different approaches could affect people with additional private pension income or modest earnings differently.
One option being discussed is an adjustment to the tax-free allowance for eligible pensioners. However, until the Chancellor announces the final arrangements, pensioners should not assume that every person over State Pension age will receive a higher personal allowance.
Lewis has also warned about the risk of creating a complicated system in which people with almost identical incomes are treated differently. Someone relying entirely on the State Pension could potentially receive different tax treatment from a person with a small private pension, even if their total income is similar.
That possibility has prompted questions about fairness, simplicity and how the policy would operate in practice.
Pension Credit: another important check
The Budget is not the only reason for pensioners to review their finances. Lewis has also highlighted the importance of checking eligibility for Pension Credit, a means-tested benefit designed to help people on lower incomes.
Many eligible pensioners do not claim it, potentially missing out on substantial financial support.
Pension Credit can top up qualifying pensioners’ income and may provide access to other forms of assistance, including help with housing costs and certain household bills. Eligibility depends on individual circumstances, including income, savings and whether someone has a partner.
People should not assume they are ineligible simply because they own their home or have some savings. The rules can be complex, and checking directly can reveal support that might otherwise be overlooked.
Pensioners or relatives helping them can use the official GOV.UK website to check the eligibility criteria and application process.
What should pensioners do now?
Before the Budget, pensioners can take several practical steps:
- Check their current State Pension entitlement and whether they receive the full rate.
- Review any additional income from private pensions, employment or savings.
- Check whether they may qualify for Pension Credit or other support.
- Wait for the official Budget announcement before making financial decisions based on proposed tax changes.
- Seek guidance from an appropriate advice service if their tax position is unclear.
The most important point is that the projected State Pension increase and the proposed tax protection are two separate issues. A higher pension does not automatically mean that every pensioner will receive the same benefit from the government’s tax arrangements.
A crucial Budget for retirees
Martin Lewis’s warning is ultimately about clarity. Pensioners need to know not only how much their State Pension will increase, but also whether that increase could affect their tax position and what protections will apply.
For people living on a fixed income, uncertainty can make financial planning difficult. Clear rules would help pensioners understand how much money they can expect to receive and whether a small amount of additional income could change their tax liability.
The Chancellor’s Budget on October 28 is expected to provide further details. Until then, pensioners should treat projected figures as estimates and avoid assuming that all the questions have already been resolved.
With retirement costs remaining a concern for many households, the government faces pressure to ensure that its policies are straightforward, transparent and workable for the people they are intended to support.