21-05-2025
Two reasons why millions of pensioners are paying higher income tax rates
Around one million pensioners in the UK are now paying income tax at the higher rate of 40 per cent or above, double the number from four years ago.
The total number of pensioners paying any income tax has increased by roughly two million between 2021-22 and 2025-26.
The freeze on income tax thresholds and increases in state and other inflation-linked pensions are cited as key factors.
Becoming a higher-rate taxpayer can trigger a "triple whammy" effect: more tax on pensions and savings, a reduced personal savings allowance, and a higher capital gains tax rate.
This trend is expected to continue due to frozen allowances, though the rate of increase may slow as the state pension age rises.
