Around 8.1 million people over State Pension age currently pay tax in retirement. The latest figures from the Department for Work and Pensions (DWP) show there are nearly 12.
7 million people over State Pension age across Great Britain, including more than 1.1m living in Scotland. However, of that overall total, some 8.
1m (64%) currently pay tax in retirement, largely due to additional income from workplace or private pensions on top of their State Pension. Retirement experts have warned that a further 900,000 people over 66 will exceed the £12,570 Personal Allowance threshold during the 2024/25 financial year and be hit with a tax bill next summer. Another two million pensioners are expected to pay tax before the freeze ends in 2028.
It’s important to be aware that older people whose sole income this year is the State Pension will not pay tax, and anyone with additional income who does not pay HM Revenue and Customs (HMRC) directly through earnings, will not receive a tax bill until June or July 2025, which must be paid by the end of January 2026. However, financial expert David Brooks, says that it is “wholly appropriate that pensioners on higher incomes are subject to higher levels of tax” adding that “it is confusing why pensioners paying tax is necessarily seen as a bad thing.” The Head of Policy at leading independent consultancy Broadstone , explained: “We would expect a growing number of pensioners to be liable for income tax as the country’s demographic.