Pension warning as 10 million older Brits to be hammered by revenue tax | UK | News | EUROtoday

Ten million pensioners will likely be paying revenue tax by 2032 – a surge of 1.5 million from the present determine – it has been claimed.

The variety of individuals over state pension age paying revenue tax has risen dramatically over the previous few years.

The variety of retirees falling into the revenue tax web grew 600,000 to eight.51 million in 2024/25, based on HM Revenue and Customs (HMRC).

This means 75% of retired Brits will likely be paying tax inside a decade, an increase of 15%, based on former pensioners minister Sir Steve Webb.

Chancellor Rachel Reeves is believed to be contemplating introducing a stealth tax in her Spring assertion subsequent month.

By freezing tax allowances past the tax 12 months 2028/29, the Treasury might rake in an additional £4billion a 12 months.

Freezing revenue tax thresholds together with an ageing inhabitants and the impact of the triple lockmeans extra pensioners are falling into the revenue tax bracket.

The present state pension is £11,502.40 per 12 months, whereas the quantity which somebody has to earn earlier than paying tax – the private allowance – is £12,570.

The state pension stays taxable so if somebody has further revenue, even a small pension, they may discover themselves breeching that tax-freelance allowance.

The Office for National Statistics has predicted the variety of individuals over state pension age will soar to 13.7 million by 2032.

Sir Steve, a associate at LCP, instructed The Telegraph 76% of pensioners must pay tax by 2032.

He stated: “The proportion of pensioners dragged into the tax net has risen sharply in recent years as large cash increases in the pension have been set against a backdrop of frozen tax thresholds.

“Although future pension rises are prone to be smaller, if thresholds proceed to be frozen, an increasing number of pensioners will find yourself paying tax.”

Sir Steve’s calucuations assume the new state pension age, rising to 67 from 2028 and a 2.5% per cent increase in state pension, the minimum allowed under the triple lock.

David Brooks, Head of Policy at leading independent consultancy Broadstone, said: “We would anticipate a rising variety of pensioners to be responsible for revenue tax because the nation’s demographic modifications attributable to our ageing inhabitants and tempo of will increase 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.