Eight and a half million people aged 65 and over are income tax payers, which is an increase of around 10% compared with a year earlier, according to figures from HM Revenue & Customs (HMRC).

In 2022/23, 7.7 million people aged 65 and over were paying income tax, compared to just 4.3 million in 2004/05.

Overall, the number of income tax payers across all ages in the tax year 2023/24 is projected to be 35.9 million, increasing by 1.3 million compared to 2022/23.

Over 5.6 million are higher rate taxpayers in 2023/24, which is a 40.7% increase compared to 2020/21, with higher rate taxpayers now making up a projected 15.6% of the overall taxpaying population in 2023/24.

Incomes tax thresholds are frozen until 2027/28 under a policy first enacted by Rishi Sunak when he was Chancellor in 2021, and was then extended by Jeremy Hunt, with the aim of raising nearly £30bn in extra tax by 2028.

Partner in private client tax at Evelyn Partners, Anthony Whatling, said: “This reshaping of the UK’s income tax landscape is largely due to the freezing of tax thresholds and the effects of fiscal drag. As incomes rise across stationary tax brackets, more and more people are dragged into higher marginal tax rates and pretty much everyone pays more in tax without the rates going up. A very effective and slightly under-the-radar way of raising a substantial amount of revenue for the Treasury.”

The former Liberal Democrat pension minister and now partner at consultants Lane Clark & Peacock, Steve Webb, has suggested that a significant increase in the number of older people paying tax will have been driving by the 10.1% increase in the state pension, which was introduced in April 2023, as well as inflation-linked increases.

He said: “A combination of high inflation and frozen tax allowances means that well over eight million people aged 65 or over are now paying tax, a doubling in the last two decades.

“The number of pensioners paying tax will continue to increase rapidly in years to come, particularly if inflation remains relatively high and thresholds continue to be frozen.”

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