Pensioners are having to pay thousands more every year to keep living the exact same lifestyle they had four years ago. New analysis has highlighted the devastating impact of stealth tax raids like the frozen personal allowance, alongside a warning as nearly two in five people risk not being able to cover their basic retirement needs.
In 2021, a single pensioner enjoying a comfortable retirement paid £5,058 in income tax for the full year. In 2024, they would need to pay £7,787 to enjoy the same lifestyle.
This marks a 54% rise in tax liability for retirees, roughly £2,729 according to the Pensions and Lifetime Savings Association.
A number of factors are behind the increase, including higher living costs and the personal allowance freeze.
The freeze started in 2021 and will only allow people to take £12,570 home before income tax each year until 2028.
With the full new state pension currently at £11,973, pensioners have a very narrow window to get more income without triggering a tax bill.
The continued freeze is expected to force tax bills onto millions more, including pensioners as reported by the Telegraph.
These concerning figures come alongside research by Scottish Widows revealing 39% of people in the UK won’t be able to afford a bare minimum lifestyle in retirement.
The PLSA currently estimates this minimum lifestyle will cost around £14,800 per year for a single person outside of London, excluding housing costs.
Meanwhile, the average projected retirement income is just £17,200 per year, leaving barely any wiggle room for people to enjoy their golden years.
