- A record 10 million over-65s are projected to pay income tax this year in the UK, a significant increase attributed to the government's continued freeze on tax thresholds.
- By 2026/27, 10.2 million over-65s, including 9.5 million of state pension age, will be taxpayers, meaning seven out of ten pensioners now pay income tax.
- This rise of nearly 3 million over-65s paying tax since 2022 is a direct consequence of the freeze on tax thresholds, which Rachel Reeves extended until 2031.
- The fixed tax-free personal allowance of £12,570 has created a 'fiscal drag,' pulling more people into paying tax or higher brackets as average earnings increase, and is expected to raise £8bn for the Treasury.
- While those solely on the full state pension will not pay income tax, economists criticise the threshold freeze as an inefficient way to raise revenue, disproportionately affecting low-income individuals and pensioners with small private pensions.
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