The number of people aged 65 and over paying income tax is set to exceed 10 million for the first time in the 2026-27 tax year, according to HM Revenue and Customs (HMRC) projections. The figures, released on Tuesday, show that 10.2 million older people are expected to be income taxpayers, up from 9.57 million in 2025-26.
Rising Tax Burden on Pensioners
The data also reveals a sharp increase in taxpayers over state pension age, rising from 9.08 million in 2025-26 to an estimated 9.58 million in 2026-27. This trend is partly attributed to the phased rise in state pension age from 66 to 67, which began recently.
Sir Steve Webb, former pensions minister and now partner at LCP, said: "The surge in older people paying income tax is continuing." He noted that frozen tax thresholds are dragging more pensioners into the tax net.
Broader Impact of Frozen Thresholds
Laura Suter, director of personal finance at AJ Bell, commented: "Frozen tax thresholds are affecting almost everyone who pays income tax, from pensioners to anyone earning more than the £12,570 personal allowance." She added that by the end of this tax year, almost a quarter of all taxpayers are expected to be over state pension age.
David Brooks, head of policy at Broadstone, said: "Pensioners are not a uniform group and, while some rely heavily on the state pension, many benefit from occupational and private pension savings built up over decades."
Higher Rate Taxpayers Also Rising
HMRC's projections also show that around 7.7 million people will be higher rate income tax payers in 2026-27, an increase of over one million from 6.6 million in 2024-25. Overall, the total number of income taxpayers in 2026-27 is projected to be around 40.8 million.
Shaun Moore, tax and financial planning expert at Quilter, said: "What were once considered tax rates for wealthier people are increasingly reaching a much broader group." He added that while wages have grown, much of the increase reflects inflation, meaning people pay more tax not because they are wealthier but because frozen thresholds capture a greater proportion of their income.
