The average retired household has a tax bill of over £7,000, research reveals.
The latest figures show that pensioners paid out more than £51 billion – or £7,000 per household – in tax in 2014 – 2015, making up almost 30 per cent of their annual income.
Of that, £2,700 is paid in direct taxation such as income tax and council tax, and £4,330 through indirect taxes including VAT and vehicle excise duty.
However, there were some signs that pensioners may be taking home more than they had last year.
Up £1,300, the new average annual income stood at £23,800 for pensioners. The tax bill had also risen, but the total amount paid in tax as a percentage of income had fallen. Pensioners are now paying 29.7 per cent, compared to 30.1 per cent last year.
By contrast, working households pay 34.5 per cent of their income in tax.
Experts have warned that pensioners are still liable to pay income tax even after they have stopped working.
Those taking advantage of pension freedoms to withdraw money from retirement savings should avoid taking big lump sums, they said. Just 25 per cent of any withdrawal is income tax free, and the rest will be added to your income for that year and taxed accordingly.