Nearly 10 million people over State Pension age are expected to be paying income tax next year, according to new HM Revenue and Customs (HMRC) estimates, as frozen tax thresholds continue to pull more pensioners into the tax net.
HMRC Forecasts 9.58 Million Taxpayers Over State Pension Age
The tax authority forecasts there will be 9.58 million income tax payers over State Pension age in the 2026-27 tax year, up from 8.16 million in 2023-24 and 7.13 million the previous year—an increase of more than one million in just 12 months.
The figures come as the Personal Allowance—the amount people can earn before paying Income Tax—remains frozen at £12,570. The threshold has been unchanged since April 2021 and Chancellor Rachel Reeves confirmed at the Autumn Budget in November 2025 that it will remain at that level until April 2031.
Why More Pensioners Are Being Taxed
Although the full new State Pension counts as taxable income, it remains below the current Personal Allowance. This means many pensioners only start paying Income Tax if they also receive income from a workplace pension, private pension or employment.
Financial experts say the combination of frozen tax thresholds, annual increases to the State Pension under the Triple Lock and rising private pension incomes means more retirees are seeing their total taxable income exceed the Personal Allowance.
Expert Analysis on Pensioner Taxation
The latest estimates were published by HMRC in its annual Income Tax liabilities statistics, which provide projections of the number of taxpayers over State Pension age.
David Brooks, Head of Policy at financial services consultancy Broadstone, said: "The State Pension remains the bedrock of retirement income for many pensioners and is a vital protection against poverty in later life.
"As the value of the State Pension continues to increase, it is inevitable that more pensioners will pay Income Tax. While this may feel unfair to some retirees whose income comes largely from the State Pension, taxation is increasingly becoming the most cost-effective way for government to distinguish between those with more and less retirement income while preserving the universal nature of the State Pension."
He said pensioners are not a uniform group, with some relying heavily on the State Pension while others benefit from occupational and private pension savings built up over many years.
Policy Challenges and Pension Credit
Mr Brooks added: "The policy challenge should not be preventing pensioners from ever paying tax, but reducing pensioner poverty and ensuring support is targeted at those who need it most.
"For example, Pension Credit continues to provide an important safety net for those on the lowest incomes and remains a key tool in tackling hardship in retirement. However, hundreds of thousands of eligible, low-income pensioners are missing out on this vital additional financial support."
He said that as State Pension costs continue to rise alongside an ageing population, the UK Government must balance maintaining adequate retirement incomes with ensuring the system remains sustainable and fair to all taxpayers.
Pension Credit Benefits
Pension Credit is worth an average of around £4,300 a year and can also unlock additional help with housing costs, Council Tax, NHS charges and, for eligible households, a free TV licence for over-75s. Despite this, many pensioners who qualify are still not claiming the benefit.
People can check whether they may be eligible for Pension Credit through the GOV.UK website or by contacting the Pension Credit claim line on 0800 99 1234—lines are open 8am to 6pm, Monday to Friday.
How to Check If You Need to Pay Tax on Your Pension
Before you can check, you will need to know: if you have a State Pension or a private pension, how much State Pension and private pension income you will get this tax year (April 6 to April 5), and the amount of any other taxable income you’ll get this tax year (for example, from employment or state benefits).
You cannot use this tool if you get: any foreign income, Marriage Allowance, or Blind Person’s Allowance.
Use this online tool at GOV.UK to check if you have to pay tax on your pension. The full guide to tax when you get a pension can be found on GOV.UK here.
