The number of UK pensioners paying the higher, 40% rate of income tax has more than doubled in fve years – while the total of those payng the highest 45% has more than trebled. The two totals combined have soared from 494,000 to 1092m. The figures have emerged following a freedom of information request by Steve Webb, a partner at pensions and investment experts and analysts LCP. One reason is the freezing of personal allowances while private and state pensions have continued to increase, moving more people into higher tax bands. The income starting point for the highest rate was also lowered in 2023-24 – from £150,000 to £125,140. Mr Webb said: ““Many people of working age may have expected that they would be basic rate taxpayers in retirement, but few will have expected to find themselves paying 40% or more out of their pensions in tax.”
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