Overview

• HMRC forecasts 8.7 million state pensioners will pay income tax in the 2025-26 year, an increase of 420,000 from 2024-25.
• Around 420,000 pensioners born before 1959 have received unexpected letters from HMRC notifying them of tax liabilities for the first time.
• More than one million retirees are projected to breach the 40% higher-rate threshold this year, more than double the count when allowances were first frozen.
• Total income tax filers are set to reach 39.1 million with 7.08 million higher-rate taxpayers as personal allowance and bracket freezes remain in effect.
• Experts warn that prolonged fiscal drag from frozen thresholds may discourage work and savings and could prompt calls for reform if extended beyond 2028.