You are here: Home - Retirement - Retirement planning - News -

One third of pensioners’ income goes on tax

Written by: Adam Lewis
The average retired household forked out just over £7,000 in tax for the 2014-15 tax year, which is equal to nearly 30% of their annual income, according to data from Prudential.

While the average income of a retired household increased to £23,800 in the 2014-15 tax year, up from £22,500 in 2013-14, the total tax paid jumped about £300 to £6,800, the report said.

Indeed the most recent available figures show that retired households paid a total of more than £51bn in tax in the 12 months to April 2015. This was made up of each household paying over £2,700 in direct taxation such as income and council tax, while just over £4,330, or 61%, in VAT, vehicle excise duty and other indirect taxes.

Stan Russell, a retirement income expert at Prudential, said: “When planning for life after giving up work it is important to remember that unfortunately you’re not retiring from paying tax. As well as paying tax and duty on the goods and services they buy every day, many retired people will also still need to pay income tax.”

For those people considering their finances in retirement, a consultation with a professional financial adviser can help establish a target income level and the necessary regular savings to achieve it. The same adviser should also help explain the tax implications of the wider range of options now available to those looking to take an income from their pension savings.

“These figures show that taxes continue to take a significant slice out of pensioners’ incomes, and the best way for most people to secure a comfortable retirement is to save a much as possible in their working lives,” Russell said.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

ISAs: your back-to-basics guide for 2018/19

Here’s everything you need to know to make the most of your unused ISA allowance ahead of the 5 April deadli...

A guide to Sharia savings accounts

A number of Sharia savings products have upped their game in recent months, beating more familiar competitors ...

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
The ultimate student money saving guide

With A-Level results out today, thoughts turn to university – the start of freedom, further education and financial responsibility. We...