More pensioners set to pay income tax as allowance freeze bites – HMRC

8.7 million people of state pension age or older were set to pay income tax on their retirement income in 2025/26, figures from HMRC showed. 

That was up by around 420,000 on the previous year and 1.85 million higher than in 2015/16.

The increase followed the freezing of the personal allowance threshold at £12,570 until April 2028. 

The full annual new state pension reached £11,973 in 2025/26, which pushed hundreds of thousands more pensioners into paying income tax.

David Brooks, head of policy at Broadstone, said: “We would expect a growing number of pensioners to be liable for income tax as the country’s demographic changes due to our ageing population.

“Fiscal drag, however, is also bringing hundreds of thousands more pensioners into paying Income Tax bracket every year as the frozen Personal Allowance thresholds combines with the triple lock-protected State Pension.

“While perhaps personally frustrating for many pensioners, it reflects the nature of inflation linked occupational pensions and a Triple-locked State Pension that continue to rise.”

Brooks added: “The government will be called on again to protect pensioners from this impact but with seemingly few ways to control the rise in pensioner incomes, taxation is the only tool left.”