Record Number of Pensioners Now Paying Income Tax
A record 10 million people aged 65 and over are now paying income tax, according to new figures from HM Revenue and Customs. This is the first time the number has hit the 10 million mark, driven by the freeze on the tax-free personal allowance and increases in the state pension under the triple lock.
Impact of Frozen Personal Allowance
The personal allowance has been frozen at £12,570 since 2021-22, dragging more pensioners into tax as the state pension rises. Chancellor Rachel Reeves extended the freeze by a further three years to 2031 in her 2025 autumn Budget, meaning it will have lasted a decade. Since the freeze began, the number of over-65s paying income tax has risen by more than three million.
Triple Lock Effect
Under the triple lock, the state pension increases each year by the highest of inflation, average earnings, or 2.5%. This has pushed many pensioners above the tax threshold. Former pensions minister Sir Steve Webb, a partner at Lane Clark & Peacock, said: “The surge in older people paying income tax is continuing, with record numbers of taxpaying pensioners in 2026-27. The recent extension of the freeze in personal allowances, combined with the continued generous indexation of the state pension, means that even more people in retirement can expect to become taxpayers for the first time in the coming years.”
Campaigners Call for Change
Dennis Reed, director of the Silver Voices campaign group, said: “It is a shocking indictment of the freeze on personal allowances that about three quarters of older people are now paying some tax on their state pensions. If Andy Burnham means what he says about tackling the cost-of-living crisis as his first priority, then he must raise the lower tax threshold as a matter of urgency. This would help not only pensioners, but all hard-working, low-income households.”
Growing Calls to Scrap Triple Lock
The rising number of taxpaying pensioners has intensified debate over the triple lock, with some arguing it is unsustainable for public finances. Meanwhile, millions face working longer under plans to raise the state pension age. The personal allowance freeze is set to continue until 2031, potentially pushing even more pensioners into tax.
