HMRC’s call to action has been issued to around nine million UK pensioners

Nine million pensioners are expected to pay income tax next year as increasing numbers of older people lose their money to taxation. Freezing the tax thresholds has brought hundreds of thousands more pensioners into the income tax bracket, prompting the new Labor government to tackle the issue.

Recent State Pension increases have inadvertently pushed many older people into new tax brackets. It is estimated that 8.95 million pensioners will pay income tax by April next year – a significant increase from 4.9 million in 2011.

Financial experts have described this as an additional burden on retirees in the wake of the pandemic and cost of living crisis. Andy Wood, from Tax Natives, expressed concern: “The number of pensioners paying income tax has seen a worrying rise. In the 2023/24 tax year, 8.27 million people aged 65 and over paid income tax.

“This number is expected to rise to 8.95 million in 2024/25, a significant jump from 4.9 million in 2010/11, highlighting a major shift in the tax burden on older citizens. Frozen tax thresholds, coupled with significant increases in state pensions, mean that for many pensioners, paying income tax has become the norm rather than the exception.

“This long-term trend highlights the continuing impact of tax policies on the aging population. The pandemic and cost-of-living crisis have fueled wage growth, but tax thresholds have barely adjusted,” reports Birmingham Live.

“The higher rate tax bracket has only increased by £270 from 2021/22, which is insufficient given the economic changes we have experienced. By not adjusting income tax brackets during periods of high inflation and rising wages, more people end up paying taxes.

“In the 2024/25 tax year, around 29.5 million people are expected to pay the standard rate of tax, up from 28.8 million the previous year. total of 6.31 million people paying at this higher rate.”