Almost a million pensioners are to be shielded from paying income tax in Wednesday's Budget.
John Healey, the Chancellor, is expected to confirm in his first budget that the full state pension will rise by £489 to £13,036, the equivalent of a 3.9 per cent increase.
The change would, under current tax policy, push thousands of people over the personal allowance threshold, forcing them to pay tax.
However, Mr Healey is also expected announce a rise in the tax-free allowance for low-income pensioners to £13,036. The move will reportedly cost taxpayers £200m a year by the end of the decade.
