State pensioners have been issued a two-year warning over a new tax bill that could come as a "shock to many". The Personal Tax Free Allowance, currently set at £12,570, is the maximum amount you can earn each year without paying income tax. The full new state pension is presently £230.25 a week, or £11,973.

Payment rates are predicted to rise by 4.7 per cent next April. Lily Megson-Harvey, policy director at My Pension Expert, said: "With the full new state pension set to reach around £12,534 next year and likely to exceed the frozen personal allowance by 2027, more pensioners risk being drawn into paying income tax for the first time , reports Birmingham Live.

"This fiscal drag could come as a shock to many and would erode the perceived benefit of the triple lock."

She added: "This would be a blow to retirees, yes, but the biggest problem at the moment is the Government's lack of clarity on the situation."

"It's nearly impossible to prepare for any change and weather any financial aftershock. The Government must be transparent and provide clear guidance to help retirees plan effectively."

Ms Megson-Harvey stated that the policy has always been costly and although Labour has pledged to maintain it for now, it risks becoming unaffordable for the Government.

She said: "Any major changes would be politically challenging and risk undermining confidence among retirees. Instead of short-term tinkering, we'd like to see a focus on long-term sustainability and fairness.

"And of course, should any changes be announced, ensuring that support is made available to retirees to help them manage their financial plans."

She added: "The Government should explore how those who rely on the state pension can keep as much for their retirement as possible, such as exemptions from any potential income tax.

"However, decisions must be made in consultation with the industry and with protections for the most vulnerable. Quick fixes risk adding complexity and deepening inequalities."

The Labour Government said earlier this year that the Personal Allowance will remain frozen at £12,570 until April 2028.