- Average annual direct tax bill rises 7%, iSIPP analysis shows
- The UK’s retired households contribute £63.442 billion a year in direct tax
Retired households have seen their annual bill from direct taxes increase by £347 as incomes have increased, new analysis from pension provider iSIPP shows.
Their average bill for direct taxes is £5,308 a year currently after a 7% increase on the previous year’s £4,961 annually, the analysis of the most recent Government data shows.
The increase in individual tax bills from income tax and council tax has boosted the collective tax take from retired households by more than £6.2 billion highlighting the contribution of older people to the UK’s finances.
Most of the increase in the tax bill is driven by a rise in the pre-tax incomes of retired households which the most recent Government data shows are £33,997 compared with £32,265 previously. That adds up to a £1,732 increase which equates to a 5.3% rise.
The analysis by iSIPP, a service designed to support UK and international customers to consolidate their pensions, found most of the increase in incomes was due to increased payouts from private pensions and investment income.
Income tax accounted for nearly 70% of the total paid out in direct taxes with council tax making up almost all of the rest bar a small amount paid in National Insurance in some retired households.
iSIPP enables customers to sign up easily at www.isipp.co.uk to consolidate pension funds into one pot, choose their preferred investment funds and monitor how they are performing 24/7 online, with complete transparency on fees and charges. It also helps individuals and their employers to make contributions.
Its free to set up service has no dealing charges or charges to transfer in existing pension funds and enables clients to create their own investment portfolio complementing its existing ‘Choice’ range of Ready-Made funds from world-leading fund managers BlackRock and Schroders.
iSIPP Managing Director Hrishi Kulkarni said: “Taxation levels are increasing across the board with the decision to not uprate income tax thresholds in line with inflation meaning more people are paying tax and some are paying higher rates including retired households.
“The good news for retired households is that income from private pensions and investments are increasing and they are also in line for a major rise in the State Pension from next April. It is important however that retired households budget for their tax bills and maximise tax-free savings where possible.”
iSIPP’s digital pension consolidation service is available to all customers with UK pension funds who are working or have worked in the UK. Built around flexibility, iSIPP provides access to over 100 funds under its ‘Create’ option allowing users to build their own portfolio. Its ‘Choice’ range include Ready-Made Portfolios from world-leading fund managers BlackRock and Schroders. BlackRock’s multi-asset, risk-managed MyMap range of funds are available which include an ESG fund and iSIPP also provides access to the Schroders’s Shariah compliant fund. Focusing on transparency, the annual trust fee is £200 plus a 0.25% platform services fee. Funds with OCF (Ongoing Charges Figure) start at as low as 0.17%.
iSIPP is not authorised or regulated to provide financial advice. This article is for information purposes only and should not be construed as financial advice or as a personal recommendation. Pension rules are subject to changes in the future. As with all investing, your capital is at risk. The value of your portfolio with us can go down as well as up and you may get back less than you invest.
