More retired baby boomers are now paying income tax than Generation Z workers in dramatic reversal of pre-pandemic trends, according to data published by HM Revenue & Customs.
The triple lock pension guarantee has pulled more elderly people into the tax net whilst youth worklessness has risen, the figures revealed.
Income tax remains the single biggest revenue raiser for Chancellor Rachel Reeves with HMRC figures showing 5.45 million Britons aged over 70 paid income tax in the 2022-23 financial year.
In comparison, HMRC reports there are just 5.23 million taxpayers aged under 30. Over-70s contribute £19.1billion in income tax receipts.
Under-30s paid £18.3bn during the same period. This disparity exists despite pensioners representing a much smaller share of the overall population.
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New HMRC data has revealed that baby boomers are paying more in tax than younger Britons
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The Institute for Fiscal Studies (IFS) found that over-65s are now more likely to pay income tax than those aged between 16 to 64.
Two thirds of pensioners now pay income tax, compared with 64.5 per cent of working age Britons. The triple lock ensures state pension payments rise by at least 2.5 per cent each year, leading to several above-inflation increases.
This has dragged more retirees with modest private pensions into the income tax net. A six-year freeze in tax-free personal allowances has exacerbated the situation.
Meanwhile, youth employment has suffered since the pandemic. Almost one million 16 to 24-year-olds are not in employment, education or training.
Analysts are concerned that many young adults are not even looking for work, further widening the generational tax gap.
In 2019-20, just 4.65 million people aged over 70 paid income tax, compared with 4.8 million taxpayers aged under 30 during the same period.
Retired baby boomers are now handing more of their earnings to the taxman than their younger counterparts, despite no longer working.
HMRC data revealed the number of top rate taxpayers rose by 10 per cent to 600,000 in the 2022-23 tax year. Higher rate taxpayers increased by 680,000 to 5.1 mill during the same period.
Analysts are concerned that baby boomers are paying more to the tax man than Gen-Z
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While 28 million workers pay the basic 20 per cent, representing four-fifths of the workforce, they account for just £75.6bn, or a third, of tax revenues.
The five million higher rate taxpayers contribute £85.1bn, another third of revenues. Those paying the 45 per cent rate account for the final third (£83.4bn) despite representing only two per cent of workers.
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Fiscal drag is dragging Britons into higher tax brackets GETTY This concentration of tax burden is expected to intensify as thresholds remain frozen, with Reeves confirming it will remain so until 2028.
As well as this, the number of top rate taxpayers is set to rise further following the decision to lower the 45 per cent threshold from £150,000 to £125,140.
The Office for Budget Responsibility (OBR) has calculated there will be 3.7 million more taxpayers overall by the 2028-29 financial year.
By the end of the decade, there will be 2.7 million more higher-rate taxpayers thanks to the stealth raid.
An additional 600,000 people will pay the top rate compared to if thresholds had risen with inflation.
