There are two main reasons for the rise in older people receiving year-end tax demands from the taxman.
A former Pensions Minister has warned of a surge in the number of pensioners being sent end-year tax demands from HMRC.
Sir Steve Webb found that the taxman sent demands to over 1.3 million people in 2023/24, nearly double the number just two years earlier.
Nearly a quarter of these were for sums under £100 while nearly a quarter were for over £1,000, a Freedom of Information Act request revealed.
Sir Steve, a partner at pension consultants LCP, said: “For many people, having to deal with the tax office is a hassle they can do without.
“But the continued freezing of the income tax personal allowance means that the numbers getting unwelcome end-of-year tax demands have soared.
“Many of these people will be pensioners whose only income is the state pension, and they now get an annual tax demand, with the amounts growing each year.
“Although the Government has indicated it may address this issue for a subset of pensioners from 2027, a much wider-ranging solution is needed.”
The main reasons for the surge in numbers are the freeze in the tax threshold, which has been £12,570 since 2021/22.
There has also been a large increase in the state pension, including an increase of 10.1% in April 2023.
Sir Steve said that with the state pension having risen a further 13% between April 2023 and April 2025, the number of people receiving these end-of-year tax demands is likely to have increased further to pass the 2 million mark.
