Pensioners cough up £24bn in income tax
The number of people aged 65 and over who pay tax has doubled to nearly 6.5 million in the two decades to 2015/16, data reveals.
But for taxpayers over the state pension age in 2015/16 (including around 400,000 women over state pension age but under the age of 65), the number of pensioner taxpayers is closer to 6.87 million.
Figures obtained by Royal London reveal the average annual tax bill stands at £3,522, but for the average male pensioner, the tax bill is £4,341 and for the three million women, it’s £2,467.
More than a quarter of taxpaying pensioners are still in paid work with 1.5 million earning employment income while 500,000 have income from self-employment.
Breaking down the tax bill by country, £21bn came from England, £1.7bn from Scotland, £0.8bn from Wales and £0.4bn from Northern Ireland.
Turning to local authorities, Royal London found pensioners in Surrey had the highest tax bill at £961m – greater than the total tax paid by pensioners in Wales. Hampshire retirees paid £763m, Essex was £756m, Greater Manchester was £646m and for Kent, the figure stood at £645m.
For the current 2018/19 tax year, it is estimated there are 6.37 million pensioner taxpayers.
Steve Webb, director of policy at Royal London, said: “Many people might assume that once you retire you cease to be of interest to the taxman. But these figures show that this is very far from being the truth.
“The number of taxpaying pensioners has nearly doubled in the last two decades. With talk of also requiring pensioners to pay National Insurance on any earnings or even pensions, the older population may start thinking of themselves as ‘generation still taxed’.
“When planning for retirement it is vital to remember that the tax office will still want a slice of your income, which reinforces the need to put aside enough to secure a decent standard of living, even after the tax man has had his slice”.
Related: See YourMoney.com’s Plan to work past state pension age? The key facts for more information.