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Home Investment Increase in state pension age creates slump in pensioner taxpayers

Increase in state pension age creates slump in pensioner taxpayers

by Uma
iStock 859630300


  • There were 6.25 million taxpayers of pension age for the tax year 2019 to 2020
  • This is a decrease of 4.1% since the previous tax year and the latest in a series of falls. There were over 6.8 million taxpayers of pension age in 2015/16.
  • Of these 59.3% are male and 40.7% were female.
  • These figures are prior to the pandemic which has seen many older workers leave the employment market.
  • The South East has by far the highest number of taxpayers of pension age and the largest amount of total income (1.01 million and £31.5 billion respectively).
  • Northern Ireland has the fewest taxpayers of pension age and the lowest amount of total income (126,000 and £3.5 billion respectively)

HMRC has published updated personal income tax tables for 2019-20

Personal Incomes Statistics 2019 to 2020: Summary for tables 3.12 to 3.15a – GOV.UK (www.gov.uk)

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown:

“Pensioner power continues to make an enormous contribution to the economy with 6.25m pensioners paying tax. However, there has been a slump over recent years, down from well over 6.8m pension age taxpayers five years earlier.

We are living longer and there has also been a trend for people to work later so surely, we would expect to see an increasing number of pensioners paying tax over this period rather than a fall.

There are several potential reasons. The major one is the recategorisation of people from workers to pensioners as the state pension age has increased – over this time-period we’ve seen big increases in women’s state pension age in particular. For instance, a woman aged 63 would have been classified as a pensioner in the last decade but she wouldn’t now.

This data doesn’t yet cover the pandemic where we saw many older workers leave the workforce and struggle to find work so the concern is we may see further falls.

Looking longer term there are still more pensioner taxpayers than there were in the early part of the last decade -there were just over 6m in 2010/11 and we should see the numbers on the rise again as state pension age increases slow down. Auto-enrolment and more flexible working patterns will also make sure that in future more people enter retirement with a decent income.”