Retired households are paying several hundred pounds more in tax every year as incomes increase, new analysis from Isipp shows.
According to data from the pension provider, the average bill for direct taxes is £5,308, an increase of £347 on the previous year’s £4,961.
The increase in individual tax bills from income tax and council tax has boosted the collective tax take from retired households by more £6.2 billion. Most of the increase in tax bills is driven by a rise in the pre-tax incomes of retired households, which the most recent Government data shows are £33,997 compared with £32,265 previously.
iSIPP said income tax accounted for nearly 70% of the total paid out in direct taxes with council tax making up almost all of the rest.
Hrishi Kulkarni, iSIPP managing director, said: “Taxation levels are increasing across the board with the decision to not uprate income tax thresholds in line with inflation meaning more people are paying tax and some are paying higher rates including retired households.
“The good news for retired households is that income from private pensions and investments are increasing and they are also in line for a major rise in the State Pension from next April. It is important however that retired households budget for their tax bills and maximise tax-free savings where possible.”
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