Labour may soon be forced to change its tax policies as the state pension could become subject to income tax. After the 4.1% increase in payments this month, the full new state pension now pays £230.25 a week, or £11,973 a year.

This is just £600 away from going over the personal allowance, which currently allows you to earn £12,750 a year without paying income tax.

Just a 5% increase in the state pension next April would mean the full new state pension rising to a level to cross the tax threshold.

Mike Ambery, retirement savings director at , part of Phoenix Group, said: "With inflation forecast to rise to around 3.7% this year, and wage growth including bonuses currently sitting at 5.6%, it looks likely that earnings will determine next year's triple lock and it's possible that we'll see next year's state pension rise above the £12,570 personal allowance.

This would leave pensioners paying tax on the alone. It seems highly likely that if not next year, the Government will have to make a decision on whether a change should be made to avoid this before the personal allowance freeze is due to lift in the 2028/29 tax year."

He said that if the state pension rises to a level where it is taxed, this will "eat into" the value of the triple lock, which guarantees the state pension rises in line with the highest of 2.5%, the rise in average earnings or inflation.

Looking at how ministers could tackle this issue, Mr Ambery said: "There are a few options on the table - the Government could lay out a plan to lift the personal allowance freeze for everyone, which would generate consistency between workers and pensioners but come at a cost to the public purse.

"They could also consider bring in a mechanism by which the personal allowance increases for pensioners alone, similar to the previous Government's ' plus' plan - this would be less costly, but risk questions of bias over workers."

In their General Election bid in 2024, the Conservatives proposed a 'triple lock plus' where the personal allowance for state pensioners would also go up in line with the triple lock, ensuring the state pension is never subject to income tax.

Another option is to change the triple lock policy itself, but Mr Ambery thinks this is unlikely as Labour have committed to the policy for the duration of this Government.

He added: "The reality is, any inflation-busting increase next year is likely to raise questions both on taxation and the long-term affordability of the policy."

If there is a 5% hike in payments next April, some 1.6 million pensioners could start paying income tax, bringing the total of pensioners who pay the tax to 9 million.

Claire Trott, divisional director for Retirement & Holistic Planning at , warned this could mean some extra paperwork to fill in.

She explained: "For those with other pension income the additional tax will be taken by way of PAYE, but if you have no other income or your other income isn't taxed PAYE then there is the challenge of making sure you are paying the correct amount of tax.

"This could mean that many more pensioners will need to do self-assessment returns, which are daunting for most, let alone those who have never had to do one before and are likely to be of an age where they might be less tech savvy and less trusting of online submissions.

"This could mean the cost of having someone do a return for you may be more than the benefit of the increase. Something needs to be done to make this simpler for everyone."