Pensioners lose nearly third of income to tax
Pensioners contribute £50bn to Treasury coffers annually
MOST PENSIONERS end up paying around 30% of their modest incomes to HM Revenue & Customs, according to a report released today, City AM reports.
Life insurance provider Prudential said the average retired household paid out around £6,400 in tax during 2011/12, from a gross income of £21,300. Some £3,800 of the tax bill takes the form of indirect taxes such as VAT and fuel duty.
The implication is Britain’s seven million retirees contribute almost £50bn to the public purse.
The two largest taxes for pensioners were income tax and VAT, each taking up 8% of income respectively.
“Retiring from work doesn’t mean that you are retiring from paying tax,” said Stan Russell, retirement income expert at Prudential.
“Whether you are liable for income tax or you are paying VAT on your purchases, the contributions you make to the Exchequer will continue throughout your retirement.”