Particle.news
Download on the App Store
6 ARTICLES
·
last wk.

Over One Million UK Pensioners Now Pay Higher Tax Rates Amid Frozen Thresholds

A doubling of pensioners in higher tax brackets highlights the impact of prolonged tax freezes and rising state pensions, with additional financial burdens on savings and capital gains.

Image
Image
Image
The Government has committed to freezing income tax thresholds until April 2028 (Photo: Connect Images/Getty)

Overview

  • The number of pensioners paying the higher 40% income tax rate has risen to 904,000, with 124,000 now in the 45% additional rate band, doubling from 2021-22 figures.
  • Tax threshold freezes introduced in 2021 and extended to 2028 are pulling more pensioners into higher tax brackets as incomes rise with inflation and pension increases.
  • The 'triple lock' policy, which ensures above-inflation state pension increases, has boosted pension incomes but also pushed many retirees into higher tax bands.
  • Crossing higher tax thresholds reduces personal savings allowances and raises capital gains tax rates, creating a compounded financial impact for affected pensioners.
  • HMRC issued 1.32 million 'simple assessments' to pensioners in 2023-24, a 74% increase from the previous year, reflecting the growing administrative complexity for retirees.