1.5 Million UK Retirees to Pay 55% Tax

January 21, 2016 Taxation in UK

Family in UKLONDON – Millions of UK retirees could see their savings taxed at a rate of 55 percent, because they saved too much over their lifetimes.

New research conducted by the UK insurance provider Aviva indicates that as many as 1.5 million UK taxpayers will face a tax rate of 55 percent on any withdrawals they make from their retirement savings.

Currently, any taxpayers who save more than GBP 1.25 million for their retirement over their entire lifetime will face a penalty tax of 55 percent.

However, in April this year, the threshold will be lowered from GBP 1.25 million to GBP 1 million.

At the time that the change was first announced, the government claimed that the decrease would only effect an extra 55 000 savers, but according to the results of the new research, taxpayers who are earning approximately GBP 80 000 per year could now run the risk of exceeding the retirement savings threshold.

Based on the number of individuals currently paying the highest individual marginal tax rate, and the number of people paying the special additional rate for incomes exceeding GBP 150 000, it is possible that as many as 1.5 million people will save enough to face the heightened tax rate.

Photo by Into Somerset