Pensioners' tax burdens revealed

UK pensioner households are paying out nearly a third of their income to the taxman, research has suggested.

About 29% of the typical gross pensioner household income of £20,130 is paid out in direct and indirect taxes, equating to £5,864 a year, insurer MetLife found.

It said this meant the total tax bill for the UK's 7.15 million retired households equated to £41.9 billion annually.

In total, direct taxes, including income tax and council tax, account for 12.2% out of the 29% tax burden with indirect taxes, including VAT, duty on tobacco, alcohol and petrol, vehicle excise duty and TV licences, accounting for 16.8%.

Less well-off households were found to proportionally pay out the most in direct and indirect tax, with 42% of their gross household income being swallowed up.

The bottom tenth of pensioner households, with a gross income put at £8,259 a year, paid an estimated £3,599 in taxes. The top 10% of pensioner households, with gross income of £47,992, saw 29% of their income going in direct and indirect tax, in line with the proportion seen by average households.

The figures are based on analysis of official figures.

Pensioners have been badly hit by the longest double-dip recession since quarterly records began in 1955, as high living costs and low interest rates have eaten away at their savings.

A study by Aviva earlier this month found that saving pots for the over-75s had almost halved in the last two years, to just under £13,000.

The Aviva report also highlighted a "concerning" finding that almost a quarter (23%) of people over 75 had a credit card debt they did not repay in full on a monthly basis, despite the fact they were likely to have retired a decade earlier.