6.7 million people of State Pension Age or over were paying income tax as of 2021/22, but that is projected to have risen to 7.1 million in 2022/23, 7.9 million in 2023/24 and 8.5 million in 2024/25 as more pensioners fall into the income tax bracket.
David Brooks, Head of Policy at leading independent consultancy Broadstone, commented: “We would expect a growing number of pensioners to be liable for income tax as the country’s demographic changes due to our ageing population and pace of increases to the state pension. But it is a reminder that with the income tax thresholds frozen at £12,500 until 2028 since 2021, an ever-growing proportion of pensioners will be captured by the tax given the increases to the state pension.
“For most people the state pension will be below the personal allowance, and it is only extra private savings that exceed this limit. It is wholly appropriate that pensioners on higher incomes are subject to higher levels are tax – it is confusing why pensioners paying tax is necessarily seen as a bad thing.”
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