Over 55s more worried about tax than death
Over-55s are more concerned about tax rises than health issues in retirement, according to new research from Aviva.
They are even more worried about their tax bill than the possibility of their partner dying.
In the insurer’s quarterly real retirement report, almost two thirds of over-55s said they were worried about an increase in taxes over the next five years.
Meanwhile, only 6% were worried about serious illness over the same period.
In the report, Aviva looked at pre-retirees (aged 55-64), those retiring (aged 65-74) and the long-term retired (aged 75 and over).
Those aged 75 and over were the least concerned about taxes, while the newly retired were the most, with 68% saying they worried about them.
Clive Bolton, at-retirement director for Aviva Life, says: “With the election over and the government taking a serious look at the UK’s income and expenditure, it’s interesting to see that 64% of over 55s are more afraid of tax increases than serious illness or the death of their partner (35%).
“This age group is particularly exposed to any sudden VAT increases or changes to fuel charges and many of them are concerned about the rising cost of living due to their relatively fixed income.”
Over-55s are viewed as particularly vulnerable to taxation changes because, while they have typically paid off their mortgage, they tend to spend the majority of their income on food, fuel and light, entertainment and motoring. Any sudden increase to these core costs would particularly hurt this age group.
Following the election, many economists have predicted a VAT increase from 17.5% to 20% at the beginning of January next year as a quick way for the new government to make a considerable dent in the budget deficit. VAT is seen to affect lower income households more because it eats up a larger proportion of their disposable income.
Invented by a Frenchman in 1954 and ironically introduced in the UK on 1 April 1973, VAT is an indirect tax levied on the value added in the production of goods and services, from primary production to final consumption and is paid by the buyer. Its levying is complex, with a number of exemptions and exclusions. For example, in the UK, VAT is payable on chocolate-covered biscuits, but not on chocolate-covered cakes and the non-VAT status of McVitie’s Jaffa Cakes was challenged in a UK court case to determine whether Jaffa Cake was a cake or a biscuit. The judge ruled that the Jaffa Cake is a cake, McVitie’s won the case and VAT is not paid on Jaffa Cakes in the UK.