Cash-strapped pensioners taxed £100 a week
The average OAP household now hands over £5,000 a year to the taxman. So just where is it going?
The combined annual tax bill for UK pensioners is around £34billion, according to the research by insurers Met Life.
The largest chunk is income tax, added to by a string of other duties including VAT, currently charged at 20%, petrol duty, vehicle excise duty and the TV licence, which only becomes free at the age of 75.
The study says a typical pensioner household has a gross income of £18,834 a year, with £5,124 then taken by the taxman. This means that 27% of their income – around £1 in every £4 – is paid out in tax.
Dominic Grinstead, managing director of MetLife Europe, said: "Tax does not end when you stop working. The fact that 27% of their gross retirement income is being swallowed up by tax is a major factor to consider when planning for retirement."
The Met Life report, which is based on figures from the Office for National Statistics, shows that poorer pensioners pay a higher percentage of their income in tax than their wealthier peers. Those with an income of £9,445 a year pay out £3,175 a year – a 33% hit compared with the 27% average.
The tax burden falls particularly hard on pensioners and others on fixed incomes, who are already struggling to cope with soaring inflation. The value and income from savings accounts has plunged since the Bank of England cut the base rate to 0.5% , the lowest level in its 317-year history.
Figures from HM Revenue and Customs show the number of tax-paying pensioners is at record levels.Of Britain's 25million taxpayers, 4million are aged 65 and above – a million more than a decade ago.