When you've spent your working life paying a huge chunk of everything you earn in tax, you'd be forgiven for thinking that in retirement the Treasury's needs ought to take second place to your own. However, new research reveals that the average retired household still loses 30% of all its income to George Osborne.
So how is he taking this cash, and can anything be done to stop him?
The research, by Prudential, found that the average pensioner household income was £21,300. However, of that, the Treasury takes £6,400. In total, pensioners in the UK are forced to hand over an incredible £45.6 billion to Osborne.
He's taking this money in a number of ways. Income tax makes up a major portion of it - consuming 8% of the average retired household's annual income. Council tax, meanwhile, accounts for around 4%.
The rest of the tax take comes from tax on the money we spend - known as indirect taxes. Of these VAT swallows 8% of every pensioner's income, and indirect taxes other than VAT (including car tax, taxes on alcohol, tobacco and petrol) combine to take another 10%.
What can you do?Avoiding income tax can be a tricky business. If any part of your income comes from the interest on savings or investments, you should ensure that as much as possible of that is wrapped up in an ISA, so you can take this income free of tax.
For any cash held in a normal savings account, if your income is below the income tax threshold, you should also reclaim half of the tax that is automatically taken from savings in accounts.
Otherwise, it's a delicate matter of calculating how to take your pension. Since the budget you have had much more flexibility over how you take it - drawing it down, taking a cash-free lump sum, buying an annuity, or taking it all at once and paying your marginal rate of tax on it. One option to cut tax would be to take your tax free lump sum at the outset and invest it in an ISA - where you can take tax free income.
However, the tax treatment of each of these options is just a small part of the broader issue. There are certainly ways you can pay less tax, but it's essential to choose the right solution taking everything into consideration, and it's often worth taking advice.
Paying tax on expenditure is something you can have better control of - by changing what you buy. The rules are bizarrely complicated, so the only way to know what attracts VAT and what doesn't is to check. For example, flapjacks are exempt but cereal bars are not, marshmallow teacakes with a biscuit base are exempt, but those without the base are not, and milkshake is exempt, but the concentrated flavourings to stir into milk yourself are not.
Alternatively, you can cut your consumption of those items which attract indirect taxes other than VAT - by car sharing to save on petrol or cutting back on drinking and smoking.
Each of these steps will help cut this enormous tax bill, but it begs the question as to whether this is right at all. Should pensioners not be exempt from tax, given that they have paid so much during their working lives?