Retired Brits Slammed with £2,700 Tax Hike Just to Keep Up
Retired Brits are feeling the squeeze like never before. Pensioners now need to cough up an extra £2,700 in tax each year just to enjoy the same lifestyle they had four years ago, according to new figures shared by The Telegraph.
Back in the 2020-21 tax year, a comfortable retirement meant paying around £5,058 in income tax. Fast forward to 2023-24, and that figure has jumped to £7,787 — a 54% increase, with no luxury upgrades to show for it. Just the same weekly shop, the same meals out, and the same annual holiday now come with a much bigger tax bill.
This change is partly down to the rising cost of living – from groceries and gas bills to travel and beauty treatments – but what’s really stinging pensioners is the government’s frozen tax thresholds. Since 2020-21, the thresholds haven’t moved an inch, and they’re not set to budge until at least 2027-28. That means even as retirement incomes try to keep pace with inflation, more pensioners are being nudged into higher tax brackets, reported the Express.
The Pensions and Lifetime Savings Association (PLSA) reckons a “comfortable” retirement now costs around £43,100 a year – a huge leap from £32,800 just a few years ago. Their idea of comfortable includes about £70 on groceries and £60 on meals out per week, plus a bit of breathing room for holidays, trips to the theatre, and the odd beauty appointment.
Rachel Reeves hasn’t ruled out the possibility of extending the tax freeze even further, which has left many retired folks worried about how much worse things could get.
Jon Greer from Quilter told The Telegraph that pensioners are being caught out by a tax system that simply hasn’t kept up with reality. He warned: “Retirees are increasingly finding themselves caught paying ever-increasing amounts of tax. The cost of maintaining a decent standard of living in retirement has risen sharply in recent years, yet income tax thresholds have remained unchanged.”
He added that this isn’t about pensioners getting richer – far from it. “They are being taxed more heavily simply to stand still,” he said. And for those who planned carefully, saved for decades, and expected some stability in their retirement years, it’s proving to be a frustrating blow.
For now, many pensioners are left wondering how long they can keep up – and how much more they’ll be expected to hand over to the taxman just to maintain a lifestyle they’ve already paid their dues for.
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