03 Apr 2024
An analysis by the House of Commons library has revealed that up to 1.6 million pensioners are expected to fall into the income tax net in the next four years.
According to the analysis, approximately 9.3 million pensioners will be paying income tax by 2028. 8.5 million pensioners currently pay income tax, but due to a freeze in the basic rate tax threshold, this number is set to increase.
Without this freeze, the threshold would have risen with prices to £15,220 in 2024 and to £15,990 in 2027/28. Research carried out by the Institute for Fiscal Studies (IFS) showed that more than 60% of over-65s pay income tax, up from 50% in 2010.
Commenting on the analysis, Baroness Altmann, member of the House of Lords, said: 'I do think it is worrying that so many more pensioners could be dragged into the tax net as the state pension may soon rise above the frozen threshold.
'Most of those tipped into tax will be poorer pensioners with little more than their state pension to live on. Most of them will be totally unaware of any liability and will never have filled in a tax return in their life. They are then at risk of being hit with fines and penalties for not paying a tiny amount of tax that they didn't even know about.'