According to data from HM Revenue and Customs (HMRC), the number of Income Taxpayers in the 2024-25 tax year is estimated to be 37.4 million, marking an increase from 33 million in 2021-22.
This figure includes the 8.5 million taxpayers who are above state pension age, representing a 26 per cent rise compared to the 6.7 million recorded in 2021-22.
The significant increase in pensioners paying tax primarily stems from the freezing of the income tax threshold, specifically the £12,570 personal allowance which has remained unchanged since 2021.
The triple lock guarantees that the state pension increases in line with inflation, earnings, or 2.5 per cent annually.
However, maintaining the freeze on the personal allowance results in a situation where a pensioner receiving the full £11,500 per year state pension along with additional private pension income becomes subject to income tax.
Pensioners coming into income tax is also the result of increased interest rates and the need to pay tax on savings above the savings allowance.
If part of your retirement plan includes substantial savings, alongside your general pension pot, you need to think about the tax implications of income from your investments.
If you would like advice on pension planning or would like to discuss your Income Tax payments, please get in touch.
