Overview

• The number of pensioners paying the higher 40% income tax rate has risen to 904,000, with 124,000 now in the 45% additional rate band, doubling from 2021-22 figures.
• Tax threshold freezes introduced in 2021 and extended to 2028 are pulling more pensioners into higher tax brackets as incomes rise with inflation and pension increases.
• The 'triple lock' policy, which ensures above-inflation state pension increases, has boosted pension incomes but also pushed many retirees into higher tax bands.
• Crossing higher tax thresholds reduces personal savings allowances and raises capital gains tax rates, creating a compounded financial impact for affected pensioners.
• HMRC issued 1.32 million 'simple assessments' to pensioners in 2023-24, a 74% increase from the previous year, reflecting the growing administrative complexity for retirees.