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Money expert says State Pension tax should be paid by older people with a higher annual income

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dailyrecord.co.uk

New figures from HM Revenue and Customs (HMRC) indicate that the number of people of State Pension age or over paying income tax has soared in recent years due to frozen tax thresholds and successive significant increases to the State Pension.

The data shows that some 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 7.1m in 2022/23, 7.9m in 2023/24 and 8.5m in 2024/25 as more pensioners fall into the income tax bracket.

The latest figures from the Department for Work and Pensions (DWP) suggest there are nearly 12.7m people of State Pension age across the UK, which means 67 per cent of all retirees are forecast to pay tax for the current financial year.

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 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 £12,570 until 2028 from 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.

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