LONDON: Pensioners pay 11% of the UK’s income tax, with the average annual bill for someone over the age of 65 coming to £3,258, according to analysis by an insurer.
Over-65s collectively contribute more than £17.5 billion to the total £157 billion yearly income tax bill, according to Prudential’s calculations.
Older people in London pay the most on average, at £8,386 a year, while those in Wales pay the least, at £1,795, according to the findings.
The average annual amount paid by someone aged over 65 in Scotland is £2,855, while the typical bill for someone of this age in Northern Ireland is £2,824, researchers found.
Stan Russell, a retirement income expert at Prudential, said: “These figures show that just because someone has retired from work doesn’t mean they have retired from paying tax, so taking into account the impact on retirement income is an important part of planning for a comfortable retirement.”
The average tax bill for over-65s across the UK was found to be £2,286 lower than that for someone aged under 65.
But in London, the gap was narrow, at £692 a year on average.
Mr Russell continued: “The implication from this analysis is that over-65s in London have either managed to secure themselves more comfortable retirement incomes or perhaps have been able to defer retirement and stay in well-paid employment for longer.”
The findings were made using analysis of income tax data for 2012/13.
The tax figures may see a shake up when the impact of the recent changes to pension rules start to have an impact on them.
The new pension freedoms introduced in April allow people aged 55 and over to cash in some or all of their pension pot .
While the first 25% of the pot is generally tax-free, the remainder is subject to tax.
Figures recently released by the Financial Conduct Authority (FCA) showed that in the first three months following the introduction of the new pension freedoms, 204,581 customers accessed their pension savings and 120,688 consumers made some form of cash withdrawal.
Here are the average amounts of income tax paid by under-65s, followed by that paid by over-65s, by UK region in the tax year 2012/13, according to Prudential:
London, £9,078, £8,386
South East, £7,089, £3,778
East of England, £6,018, £3,333
Scotland, £4,677, £2,855
Northern Ireland, £3,644, £2,824
West Midlands, £4,199, £2,544
East Midlands, £4,364, £2,472
Yorkshire and the Humber, £4,074, £2,456
North West, £4,217, £2,449
North East, £3,811, £2,239
South West, £4,639, £2,189
Wales, £3,745, £1,795
