More elderly paying income tax as number on higher rate also rising

There were around 9,570,000 people in this age bracket paying income tax in 2025-26.

The latest HMRC figures forecast that in 2026-27, the number of people aged 65 and over expected to be paying income tax will rise to 10,200,000.

Sir Steve Webb, a former pensions minister who is now a partner at consultants LCP (Lane Clark & Peacock), said: “The surge in older people paying income tax is continuing.”

The data also found that around 7,700,000 people are projected to be higher rate income tax payers in 2026-27 - over one million more people compared with the 6,600,000 higher rate income tax payers two years earlier, in 2024-25.

In Scotland it is estimated there will be 3.3 million income tax payers in 2026/27, an increase of around 80,000, with some 643,000 expected to be on the higher rate of 42% on earnings above £43,663.

Clare Moffat, pensions and tax expert at Royal London, said: "More people are finding themselves paying higher rates of tax, not because they're suddenly wealthy, but because tax thresholds have remained frozen while wages have risen.

“What many don't realise is that crossing into the higher-rate tax band can reduce valuable tax allowances. As a result, many people are likely to have increased financial planning needs in the years ahead.

"The silver lining is that pension contributions can reduce your taxable income, meaning some people may be able to bring themselves back below a tax threshold while also boosting their retirement savings.

“At a time when more people are being pulled into higher rates of tax through fiscal drag, making the most of available allowances and reliefs has never been more important."

HMRC said the number of people paying income tax in 2026-27 is projected to be around 40,800,000, with their report saying the growth was “mainly due to population and income growth combined with frozen Income Tax thresholds.”

This includes a projected 31.8 million basic rate and savers rate Income Tax payers, a 5.9% increase, of which 415,000 are on the savers rate and 31.4 million are on the basic rate.

And Shaun Moore, a tax and financial planning expert at wealth manager Quilter, said: “What were once considered tax rates for wealthier people are increasingly reaching a much broader group.”

He added: “While pay packets have grown in recent years, much of that increase has simply reflected higher inflation and living costs.

“The result is that people are paying more tax not necessarily because they have become significantly wealthier, but because frozen thresholds mean a greater proportion of their income is being captured by the tax system.”

The number of income tax payers over state pension age was 9,080,000 in 2025-26, with an expected jump to 9,580,000 in 2026-27.

The state pension age has started a phased rise, gradually increasing in steps from 66 to 67.

Laura Suter, director of personal finance at AJ Bell, said: “Frozen tax thresholds are affecting almost everyone who pays income tax, from pensioners to anyone earning more than the £12,570 personal allowance.

“By the end of this tax year, almost a quarter of all taxpayers are expected to be over the state pension age as a number of factors have combined to mean that more pensioners are paying tax on their income.

“The general trend of an ageing population means there are more people over the state pension age, but also more people are working past this point, leading to more taxpayers.”