HM Revenue & Customs announced that the number of people of state pension age or older paying at least 40% tax has doubled from 494,000 to 1,028,000 since 2021-2022.
In all around 8.8 million pensioners are paying income tax, up from only 6.7 million in 2021-22 due to the jump is frozen tax thresholds. As pensions increase, more people are pulled into higher tax brackets, meaning they have to pay more – a process known as fiscal drag.
Being a higher-rate taxpayer could also increase the tax you pay on your savings, as your personal saving allowance reduces from £1,000 to only £500 per year. Speak to our financial advisers to see how this might impact your income.