In the midst of the election debate around pensioners and tax, HM Revenue and Customs has today published its annual update of the number of pensioners paying income tax
Pensions & benefits Pensions & benefits DB pensions DC pensions Personal financeIn the midst of the election debate around pensioners and tax, HM Revenue and Customs has today published its annual update of the number of pensioners paying income tax. Key figures are:
- The number of people over pension age paying income tax rose from 7.85m in 2023/24 to 8.51m in 2024/25 – an increase of 660,000;
- Since 2020/21 (when pension age rose to 66), the number of pensioners paying tax is up just over two million – from 6.47m in 2020/21 to 8.51m this year;
- Focusing on all those aged 65 or over, there are now just under 9 million taxpayers (8.95m), compared with 4.9m in 2010/11 on the same definition, an increase of around 4 million;
LCP has recently published analysis on the issue of pensioners and tax which found that just under 2.5m pensioners currently receive state pensions which – on their own – are in excess of the personal tax allowance. The large majority of these are older pensioners on the ‘old’ state pension system, who combine a basic pension with a significant earnings-related pension under the SERPS scheme.
Commenting, Steve Webb, partner at LCP said:
“These new figures from HMRC are very timely and help to inform the debate about pensioners and tax. They show that a combination of frozen tax thresholds and significant increases in the state pension means the number of pensioners paying tax has continued to soar. But this is a continuation of a long-term trend which has seen the number of over 65s paying tax rise by around 4 million since 2010/11. For a pensioner in Britain, being an income taxpayer is now the norm rather than the exception”.
Notes to editors:
- HMRC’s new figures can be found at: Table 2.1 Number of individual Income Tax payers - GOV.UK (www.gov.uk)
- LCP’s recent analysis can be found at: new research (lcp.com)