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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

To think the UK unfairly taxes families?

556 replies

OwnGravityField · 09/11/2025 12:52

I have just found out that the UK is an outlier, in that it completely stops collecting a form of social tax (NI in the UK) once someone gets to pension age.

In every other country, pensioners’ contributtion as a proportion of income is much more similar to working households.

Example of disparity in the UK:

A working person earning 25k pays:

  • Income tax: £2,486
  • NI: £1,002
  • total = £3488

A pensioner with an income of 25k pays only:

  • Income tax: £2,486
  • no NI
  • total = £2486

So, a UK worker on 25k pays 40% MORE total tax than the pensioner (the difference between 2486 and 3488).

Let’s compare with a beloved utopia of fairness, such as Sweden: worker on similar salary pays 9% more tax than a pensioner.

Yes, other countries have slightly larger differences, but none except France come anywhere close to the UK difference in tax treatment between workers and pensioners.

In the interests of balanced sharing of info: France is tax and spend basket case. France taxes workers roughly twice as hard as pensioners. It’s obscene and the country is practically bankrupt.

Most other European countries narrow the gap by keeping small health or social contributions on pension income.

You might be thinking most UK pensioners don’t have 25k coming in? Nope. 3 million have individual incomes of 25k or more.

Anyway, I think it’s shocking that people at the most expensive time of their lives (kids, mortgage, food) are taxed so much more heavily. AIBU?

OP posts:
Katypp · 10/11/2025 13:55

nightmarepickle2025 · 10/11/2025 11:52

No one has the right to say they’re finished paying tax, most of us don’t pay anywhere near as much in tax as we take out.

I don't think anyone is making an announcement that they are no longer paying tax (or NI as we are talking about here).
It's the system, which for some reason pensioners are being blamed for as if they personally devised it.

Katypp · 10/11/2025 13:53

BritHoward · 10/11/2025 12:20

I think without a doubt the pensioners are going to lose their NI Exemption - it's just not sustainable given the projections on the increase of the proportion of the population who will not be working due to ill health and retirement. It's an obvious target.
The last battle will be the means testing of the state pension in maybe about 10 - 20 years, we can't keep increasing the pension age to fix this problem - or maybe we can by insisting you'll be 80 before you can claim it, otherwise if you don't have a private pension you'll live off pension credit. Fun times ahead!
Edited not pension credit - it would have to be renamed maybe it would be called age-related support. Only available to the over 67s.

Edited

It will be interesting to come back in 20 years when the more vocal against pensioners on this thread are 20 years nearer THEIR pension age and see if they still think the same about things then.
Of course, they will state now that they don't expect a pension, would be happy to pay NI on their pension for the greater good etc, but words are free.

Sexentric · 10/11/2025 13:42

BritHoward · 10/11/2025 13:27

And we shouldn't forget about people who live off their income generating investments - that includes landlords and those lucky individuals with a very large investment portfolio - I'm guessing it also includes trust funds - they don't pay NI either.
It's time everyone started paying the at the same rate as those on PAYE.

Yup. This

BritHoward · 10/11/2025 13:27

rainingsnoring · 10/11/2025 12:44

Yes. It's ridiculous nowadays for all those reasons.

Cynically, I think governments want to get rid of NI, not for those reasons but because they can then turn around to the electorate and say that they didn't pay NI so are therefore not entitled to a pension. I think this will be their BS logic.

And we shouldn't forget about people who live off their income generating investments - that includes landlords and those lucky individuals with a very large investment portfolio - I'm guessing it also includes trust funds - they don't pay NI either.
It's time everyone started paying the at the same rate as those on PAYE.

Lifestooshort71 · 10/11/2025 12:54

Nail on the head. Those of identical incomes (from whatever source) should pay the same amount of tax, regardless of age, working status etc
Totally agree as long as this includes people on all benefits (not just state pension). Just because a benefit is a contributed one shouldn't make any difference to paying income tax. I would also have been quite happy to continue paying NI when I carried on working past pension age - to say I'd paid enough was a ridiculous statement, both I and, more importantly, my employer should have continued with the deduction, so cancelling NI and rolling it into income tax would make sense in this instance. Perhaps raise the personal allowance initially though to give everyone a little bit of breathing space?

Plantatreetoday · 10/11/2025 12:50

Sexentric · 10/11/2025 12:20

Of course ut is. Pensions have the triple.lock which compares (way more favourably!) to annual UC credit increases but this thread is about tax not triple lock. Pensioners are currently taxed at a lower rate to workers on the same income. That is an absolutely ageist system. Rigged in favour of pensioners.

Pensioners only have the triple lock until the state pension catches up and brings the majority out of poverty
It was never set up to be used for ever

Pensioners are taxed at the same rate for income tax. Currently they do not pay national insurance

Let’s look at capital gains tax
It’s an income but taxed at 18% riding to just 28% over £50k. ( no ni )
That’s hardly the same as working people including those pensioners who continue to work past pension age

There are many ways workers avoid the full tax and ni on earned income.
Plugging those gaps will reduce the welfare spend just for starters (including as an aside more student loan payback, the lack of which is increasing the % interest for young students).

With a UC increase of 6% and no changes to eligibility for PIP etc etc it’s clear Labour are not treating everyone equally and not getting a handle on spending.
So what do people expect
Obviously taxes were going to rise under Labour and obviously most of us were going to foot the bill

rainingsnoring · 10/11/2025 12:44

Badbadbunny · 10/11/2025 10:29

Nail on the head. Those of identical incomes (from whatever source) should pay the same amount of tax, regardless of age, working status etc. Scrap NIC and raise income tax accordingly. NIC is a relic of a bygone time that has morphed into just another tax and is completely unnecessary. Especially seeing as so many get "NIC credits" towards state pensions without actually paying NIC, such as low income part time workers, child responsibility, carers, unemployed, disabled etc. There is no link between the NIC you pay and the benefits you receive - it's all about "credits" which for some people are "earned" without paying NIC!

Yes. It's ridiculous nowadays for all those reasons.

Cynically, I think governments want to get rid of NI, not for those reasons but because they can then turn around to the electorate and say that they didn't pay NI so are therefore not entitled to a pension. I think this will be their BS logic.

OneAmberFinch · 10/11/2025 12:41

Badbadbunny · 10/11/2025 10:29

Nail on the head. Those of identical incomes (from whatever source) should pay the same amount of tax, regardless of age, working status etc. Scrap NIC and raise income tax accordingly. NIC is a relic of a bygone time that has morphed into just another tax and is completely unnecessary. Especially seeing as so many get "NIC credits" towards state pensions without actually paying NIC, such as low income part time workers, child responsibility, carers, unemployed, disabled etc. There is no link between the NIC you pay and the benefits you receive - it's all about "credits" which for some people are "earned" without paying NIC!

Yup, fantasy tokenomics - underpins the entire system...

rainingsnoring · 10/11/2025 12:41

BritHoward · 10/11/2025 12:20

I think without a doubt the pensioners are going to lose their NI Exemption - it's just not sustainable given the projections on the increase of the proportion of the population who will not be working due to ill health and retirement. It's an obvious target.
The last battle will be the means testing of the state pension in maybe about 10 - 20 years, we can't keep increasing the pension age to fix this problem - or maybe we can by insisting you'll be 80 before you can claim it, otherwise if you don't have a private pension you'll live off pension credit. Fun times ahead!
Edited not pension credit - it would have to be renamed maybe it would be called age-related support. Only available to the over 67s.

Edited

I agree that it will be the first thing to go amidst much screaming. I expect they will do it gradually because of this.
Getting rid of the triple lock would be much harder and I suspect will only happen in a financial crisis, which will certainly come. The rise in pension age and means testing will also both happen. Then we really will see extremely poor elderly folk in the country. The current generation of pensioners should be thanking their lucky stars compared to what their grandchildren and great grandchildren will have to live with.

Plantatreetoday · 10/11/2025 12:38

BritHoward · 10/11/2025 12:20

I think without a doubt the pensioners are going to lose their NI Exemption - it's just not sustainable given the projections on the increase of the proportion of the population who will not be working due to ill health and retirement. It's an obvious target.
The last battle will be the means testing of the state pension in maybe about 10 - 20 years, we can't keep increasing the pension age to fix this problem - or maybe we can by insisting you'll be 80 before you can claim it, otherwise if you don't have a private pension you'll live off pension credit. Fun times ahead!
Edited not pension credit - it would have to be renamed maybe it would be called age-related support. Only available to the over 67s.

Edited

In 20years ie 2045
New pensioners would have had the benefit of employer contributions to pensions for 27 years ( since 2018)
I think the change might come a little later based on that
ie 30 years so pension pots can build for 37years with those added contributions

rainingsnoring · 10/11/2025 12:33

Garamousalata · 10/11/2025 11:00

I came on to say exactly that.

In what way is it ageist? You mean ageist towards the current young? In that case, I agree.

rainingsnoring · 10/11/2025 12:31

Kitte321 · 10/11/2025 10:27

In addition, with the sharp change in demographics since the 50,s the current pension structure is not fiscally sustainable. Factually, we will run out of money to fund it. Something needs to change, surely the majority of broad minded folks believe that. You can’t have a working population funding pensions/social care/NHS to the exclusion of everything else.

Exactly. I've made the point on this thread and another running one.
Surely this obvious to anyone with any sense.

Sexentric · 10/11/2025 12:20

Plantatreetoday · 10/11/2025 12:14

UC will be increased by 6.2% next year
More than pensions

The system therefore isn’t ageist

Of course ut is. Pensions have the triple.lock which compares (way more favourably!) to annual UC credit increases but this thread is about tax not triple lock. Pensioners are currently taxed at a lower rate to workers on the same income. That is an absolutely ageist system. Rigged in favour of pensioners.

BritHoward · 10/11/2025 12:20

I think without a doubt the pensioners are going to lose their NI Exemption - it's just not sustainable given the projections on the increase of the proportion of the population who will not be working due to ill health and retirement. It's an obvious target.
The last battle will be the means testing of the state pension in maybe about 10 - 20 years, we can't keep increasing the pension age to fix this problem - or maybe we can by insisting you'll be 80 before you can claim it, otherwise if you don't have a private pension you'll live off pension credit. Fun times ahead!
Edited not pension credit - it would have to be renamed maybe it would be called age-related support. Only available to the over 67s.

Plantatreetoday · 10/11/2025 12:14

Sexentric · 10/11/2025 11:33

It isn't ageist to point out the system is CURRENTLY ageist - rigged against the young in favour of pensioners!

UC will be increased by 6.2% next year
More than pensions

The system therefore isn’t ageist

nightmarepickle2025 · 10/11/2025 11:52

No one has the right to say they’re finished paying tax, most of us don’t pay anywhere near as much in tax as we take out.

No5ChalksRoad · 10/11/2025 11:48

LaserPumpkin · 10/11/2025 11:23

In one year in the 1970s there seems to have been annual growth in wages and salaries of 30%, and as you can see from the linked chart wage growth in the 70s does appear to be generally higher than in some other decades

https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/kgq2/qna

Relative to inflation, though?

Sexentric · 10/11/2025 11:33

Garamousalata · 10/11/2025 11:00

I came on to say exactly that.

It isn't ageist to point out the system is CURRENTLY ageist - rigged against the young in favour of pensioners!

CanSeeClearlyNowTheRainHasGone · 10/11/2025 11:28

Justacigarette · 09/11/2025 16:54

Many working people will pay NI for more years than they need to “get their stamp”, but they still need to keep paying as long as they are working.

it should be scrapped and replaced within the general taxation.

dividends should also be taxed at the same rate as income

dividends should also be taxed at the same rate as income

They are, more or less, but most people don't realise.

First CT is paid at 19/20%, then dividend tax at 8.75%.

£100 less 20% less 8.75% = £73 (27% tax)
£100 less 20% less 33.75% = £53 (47% tax)

Basic rate
8.75%
Higher rate
33.75%
Additional rate
39.35

If you compare salaries these are 20/40% plus 8% NI across a limited portion of your income. So effectively 20% plus 6%.

Thr only significant difference is that there are no employER NI's on dividends. And by significant I'm talking about roughly 14% - such is the government's tax on jobs. This is a tax i think should be abolished as it depresses wages and growth.

LaserPumpkin · 10/11/2025 11:23

No5ChalksRoad · 10/11/2025 10:58

Please cite statistics and sources for this.

In one year in the 1970s there seems to have been annual growth in wages and salaries of 30%, and as you can see from the linked chart wage growth in the 70s does appear to be generally higher than in some other decades

https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/kgq2/qna

Garamousalata · 10/11/2025 11:00

moderndilemma · 09/11/2025 12:56

Here we go yet ANOTHER ageist thread.

I came on to say exactly that.

No5ChalksRoad · 10/11/2025 10:58

Badbadbunny · 10/11/2025 10:31

Average pay rises were very high in the 1970s too! You seem to forget to mention that!!

Please cite statistics and sources for this.

BIossomtoes · 10/11/2025 10:55

Badbadbunny · 10/11/2025 10:31

Average pay rises were very high in the 1970s too! You seem to forget to mention that!!

Of course I don’t forget it. They didn’t keep with runaway inflation.

JoyintheMorning · 10/11/2025 10:48

Pension differences, I do see the point that OP is making. However I think we need to remember that back in the 1980s or so it we all realised that pensioners in other countries were paid much more than ours. There was a conscious decision to improve our pensions.
The Triple Lock is one of them as is Winter Fuel Allowance especially because many old people were living in lower standard housed. This kind of differential in tax is another. We are catching up with how Europe on how we reward pensioners and differences are tailing off.

Badbadbunny · 10/11/2025 10:31

BIossomtoes · 10/11/2025 10:06

Of course I’m smart enough to realise that but it’s complete bollocks to say people are crippled with taxes when they’re currently lower than they’ve been for over 50 years. The cost of living was a massive issue in the 70s, by the way, inflation was in double digits for the entire decade, it reached 25% at one point.

The only people who see the past as some kind of economic idyll are too young to remember it.

Average pay rises were very high in the 1970s too! You seem to forget to mention that!!