Retirees paying £4bn more tax than previously thought
Pensioners are paying around £4 billion more in income tax than had previously been estimated, according to Royal London and the Centre for Policy Studies.
The latest figures published by HMRC show that pensioners paid £17.9 billion in income tax on their pensions in 2016/17, and £18.4 billion in 2017/18.
A footnote in the paper said the method for estimating pension tax figures had changed, using real-time information supplied by pension schemes instead of a sample survey.
Michael Johnson, research fellow at the Centre for Policy Studies, said this added an additional £4bn to the estimate for 2016/17 compared to the last time the figures were published, in February 2018.
Steve Webb, director of policy at Royal London, said:
"It is outrageous the Government has sneaked out these massive revisions to the figures for the amount pensioners pay in tax without any comment.
"It is clear that pensioners who have worked hard and saved hard are putting billions extra back into the economy through the tax on their pensions."
The updated figures also showed pension tax relief is more than £5bn lower than estimated in the 2018 publication.
Webb added that "the Chancellor must now revisit any thought of cutting help for pensions in the Budget later in the year".
Get in touch to discuss your finances.