Nearly two million over-65s forced to file tax returns

Nearly two million over-65s now have to file tax returns, new figures reveal.

It comes as increasing numbers of pensioners are paying higher rates of tax under the Conservatives, and HM Revenue and Customs is in the depths of a customer service crisis.

The latest figures from HMRC show that more than 1.8 million over 65s had to fill out a self assessment tax return for the previous tax year.

The total has grown by 100,000 in five years as more pensioners are burdened with complex tax affairs.

MPs on the public accounts committee this week gave HMRC three months to improve "unacceptable" levels of customer service. It came days after MPs wrote to Jim Harra, head of HMRC, expressing “serious concerns” the taxman's work from home policy was causing long delays for callers ahead of the self-assessment deadline at the end of the month.

Self-assessment returns need to be filed if a taxpayer earns income from investments, self-employment or property, or if they need to pay capital gains tax on the sale of assets.

The data shows over-65s now make up 16pc of taxpayers filing returns, compared to young people aged 16 to 24 who make up just 2.7pc.

Andrew Tully, of pension provider Canada Life, said the increase could be attributed to the steady growth in pensioners' wealth over the years.

The average pensioner had a weekly income of £361 in 2020-21, up from £322 in 2015-16 and from £316 in 2010-11, according to the Office for National Statistics.

The number of pensioners paying higher rates of income tax has also leapt 70pc in the last decade.

Steve Webb, former pensions minister and now partner at pension consultants LCP, said: “As more pensioners are dragged into the tax net and the size of the pensioner population grows, we can expect to see more of the over-65s having to go through the challenges of filing a tax return in future.”

Steven Cameron, of pension provider Ageon, said the increase in over-65s filing returns may reflect pensioners’ growing reliance on property income in retirement.

Over-65s now own almost 1.5 million buy-to-let properties, up from 1.3 million in three years, worth an estimated £437bn according to research by estate agent Savills.

More than 483,000 households over 65 in England drew an income residential investment in 2021, the analysis found.