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£30bn HMRC bombshell as millions more pensioners dragged into paying tax
HMRC data indicates frozen tax thresholds have caused pensioners' income tax payments to surge to £29.8bn, with 8.8 million now paying.
- Fresh HMRC statistics show pensioners paid £29.8bn in income tax in 2024/25, a rise of more than 40% in just two years, driven by the "constant freezing of thresholds."
- Fiscal drag, caused by frozen tax thresholds, is pulling more people into paying tax as incomes rise, with 9.6 million pensioners expected to pay income tax by 2026/27.
- The cost of pension tax relief has surged from £47.8bn to £60.4bn, an increase of around 26%, as higher-rate taxpayers receive 40% tax relief compared with 20% for basic-rate taxpayers.
- Labour Party Prime Minister Andy Burnham and Chancellor John Healey maintain that pensioners with only state pension will not pay income tax, a commitment the Treasury confirmed continues throughout Parliament.
- Former pensions minister Steve Webb believes major changes are unlikely before the next election, warning that slashing tax relief would be "hugely politically unpopular" despite rising costs.
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Those who work alongside the pension could benefit significantly from 2026. Up to 24,000 euros of wages per year remain tax-free via the active pension.
·Berlin, Germany
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Coverage Details
Total News Sources33
Leaning Left2Leaning Right3Center24Last UpdatedBias Distribution83% Center
Bias Distribution
- 83% of the sources are Center
83% Center
C 83%
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