A now almost nailed on increase in the full state pension to around £12,535 a year next April will put it only just shy of the income tax threshold.

Many pensioners already earn over the £12,570 personal allowance, landing them with an income tax bill if they have a private pension too, or if they earned state pension top-ups during their working life.

But experts say the standard state pension rate will now be 'perilously close' to the basic tax threshold, and create a dilemma for the Chancellor.

The Government has said the personal allowance will be kept at £12,570 until at least 2028 - and there is speculation it could extend this freeze at the autumn Budget in November.

But on the trajectory set by the triple lock, the state pension will already overtake it by April 2027.

Triple lock: State pension is increased every year by the highest of inflation , average wage growth or 2.5 per cent

People drawing the full state pension are on course to get a £560 a year boost to their payments from next April.

That represents a 4.7 per cent rise, in line with earnings growth figures released today

The state pension is increased every year under the triple lock - the highest of inflation, average wage growth or 2.5 per cent - which the Government has promised to stick to for the whole of this parliament.

The key CPI figure is not due out until next month, but inflation is currently running at 3.8 per cent and the rate is not expected to surpass the wage rise figure.

The weekly full state pension, received by people retiring since 2016 if they qualified by paying enough National Insurance during their working life, is £230.25 now so would rise to £241.05 next April.

People who retired before April 2016 on a full basic state pension are also set to get a 4.7 per cent increase, from around £9,175 to just over £9,600 a year. The weekly basic rate is now £176.45, so would rise to £184.75.

However, older people on the basic rate also get hefty top-ups, called S2P or Serps, if those were earned earlier in life.

That can already push their state pension well above the personal allowance threshold, so they have to pay an income tax bill.

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'The standard rate of the new state pension is creeping ever closer to the frozen personal tax allowance,' says former Pensions Minister Steve Webb, who is now a partner at LCP and This is Money's retirement columnist.

'Indeed, we know for certain that someone who has no other income aside from the new state pension will be a taxpayer come April 2027.

'It is already the case that nearly three quarters of all pensioners pay income tax, and the ongoing freeze in tax thresholds coupled with steady rises in the pension will drag more and more into the tax net.'

Rachel Vahey, head of public policy at AJ Bell, says: 'Pensioners will be rejoicing at the prospect of an inflation-busting rise to the state pension from April next year as a result of the triple lock guarantee, with the latest ONS earnings growth figure coming in at 4.7 per cent for the period between May and July of this year.

She says this would put the full state pension above £12,000 for the first time ever and 'perilously close' to the frozen personal allowance.

'This poses a significant conundrum for Rachel Reeves and the Treasury. The government will come under increasing pressure to make a decision regarding either the personal allowance or whether it can sustain the triple lock as it has promised at least to the end of this parliament.

'Removing the freeze on the personal allowance would come at significant cost to the Treasury at a time when the Chancellor's fiscal headroom is already strained at best, while an overhaul of the triple lock would come with huge political risk before the next general election.'

Source: Standard Life

State pension and the personal allowance

Mike Ambery, retirement savings director at Standard Life, part of Phoenix Group says: 'The planned uplift will be some comfort for pensioners grappling with rising bills and the lingering effect of inflation on everyday essentials.

'However, a full new state pension of £12,534.60 will also be over 99 per cent of the personal allowance. This means pensioners will need just £35.40 of other income before paying income tax.

'While the triple lock continues to offer protection, questions around the long-term sustainability of the state pension persist in light of rising life expectancy and a squeezed public purse.

'Options to boost affordability include abolishing the triple lock, raising the state pension age faster or higher than planned or introducing an element of means testing - all of which would prove very controversial.'

Got a pension question? Email pensionquestions@thisismoney.co.uk

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State pension increase to £12,535 will push it into income tax net