Retirement Savings Tax to Hit Over a Million People! Temu Earns $120 Million with Just 8 Staff; UK Inflation Holds Steady at 3.8% for Third Month
- TBA
- Oct 26
- 5 min read
More than 1.1m people over pension age could pay income tax on savings accounts
According to the latest analysis by UK investment platform AJ Bell, based on data from HMRC (Her Majesty’s Revenue and Customs), it is estimated that in the 2025–2026 tax year, about 1.16 million people in the UK over the state pension age will have to pay income tax on interest earned from savings accounts.
This number has grown rapidly in recent years — from 493,000 in 2022–2023, rising to 953,000 in 2023–2024, and is projected to reach 1.09 million in 2024–2025 — more than doubling in just three years.
The analysis attributes this trend mainly to the rise in the Bank of England’s base rate and the long-term freeze on personal income tax thresholds. AJ Bell noted that these retired savers now account for roughly 44% of the 2.64 million people expected to pay tax on savings interest in the current tax year.
At present, the UK’s Personal Savings Allowance (PSA) is as follows:
Basic-rate taxpayers can earn up to £1,000 in savings interest tax-free.
Higher-rate taxpayers have a tax-free allowance of £500.
You can learn more about how savings interest is taxed in our previous article: “Do you have to pay tax on savings interest in the UK? What happens if you don’t report it? What tax-free allowances can you use?”
In addition, savings held in tax-free accounts such as Individual Savings Accounts (ISAs) and certain National Savings & Investments (NS&I) products do not count toward the PSA limit, and remain ideal tools for protecting savings, boosting returns, and reducing tax exposure. However, there are reports that the Labour government may consider lowering the annual cash ISA contribution limit to encourage more investment in the stock market. For the 2024/25 tax year, individuals can contribute up to £20,000 to ISAs each year.
Currently, it is estimated that over 14 million people in the UK have more than £10,000 in cash savings. Retirees often hold larger cash reserves to reduce investment risk or maintain liquidity for short-term needs. However, as cash savings grow, an increasing number of pensioners are being drawn into the income tax net, and some are even pushed into higher tax brackets.
Withdrawals from pension funds above the tax-free allowance are subject to income tax; reinvesting the funds into other assets may also trigger capital gains tax or dividend tax. Even leaving the money as cash savings could result in additional income tax bills. Therefore, retirees are advised not to withdraw pension funds unnecessarily, to avoid unwanted tax liabilities.
China’s Temu more than doubles EU profits to nearly $120m despite having only eight staff
Chinese e-commerce platform Temu saw a sharp rise in profits from its European Union operations last year — earning nearly $120 million in pre-tax profit despite employing only eight staff members.
According to the latest financial statements filed by Whaleco Technology, Temu’s EU headquarters based in Ireland, the company’s pre-tax profit for the 12 months ending December 2024 surged 171% year-on-year, jumping from $44.1 million in 2023 to nearly $120 million. Over the same period, revenue increased from $758 million to $1.7 billion.
However, Temu paid only $18 million in corporate tax, about $3 million of which was a top-up payment under the EU’s global minimum tax policy adopted at the end of 2023 — a figure that has sparked tax fairness debates.
The filings show that Temu now has over 115 million users in the EU, equivalent to about one-quarter of the region’s total population.
According to the CEO of the Fair Tax Foundation, Temu’s Irish entity reports only platform commission and service fee income, while the actual consumer transaction volume facilitated through its platform may exceed $10 billion. Including an estimated $2 billion in sales from UK-based sellers, Temu’s total scale now surpasses that of British retailer Next, and rivals Primark.
This reveals a major disconnect between Temu’s massive sales in the UK and Europe and its minimal tax contributions. The company’s complex tax haven-based corporate structure means that European countries gain little tax revenue from its operations.
Due to Chinese e-commerce platforms’ significant price advantage, a growing number of UK and European trade associations are urging governments to act swiftly to ensure local retailers can compete fairly with Chinese e-commerce giants. Proposed measures include strengthening the global minimum tax and digital services tax, reviewing tariff exemptions, and requiring multinationals to disclose country-by-country tax payments.
The United States has already abolished the “de minimis” exemption, which previously allowed imports under $800 to be duty-free. The EU plans to end customs duty exemptions for parcels valued under €150 by 2028, and the UK Chancellor has also said that the government is reviewing similar loopholes.
UK inflation unexpectedly remains at 3.8% for third month in a row
The UK Office for National Statistics (ONS) released new data last week showing that inflation in September remained at 3.8%, unchanged for the third consecutive month and below market expectations of 4%. This provides a positive signal ahead of Chancellor Rachel Reeves’ key budget announcement next month.
Earlier forecasts had predicted inflation would rise to 4%, but the data showed that increases in transport costs were offset by a slight decline in food prices and a slowdown in inflation within the “recreation and culture” sector.
Meanwhile, food inflation stood at 4.5%, marking its first decline since May last year. This suggests that the upward pressure on food prices caused by climate-related factors has begun to ease.
Although September’s inflation came in below expectations, it remains well above the Bank of England’s 2% target, and this is the 12th consecutive month it has exceeded that level.
Chancellor Rachel Reeves commented: “I am not satisfied with these figures. Too many people are working harder but feeling worse off. We must change that. The government will fully support the Bank of England in bringing inflation down.” She also revealed that a series of measures to ease the cost-of-living pressures on households will be announced in the budget on November 26.
Because inflation came in lower than expected, markets have moved up their forecast for the Bank of England’s first interest rate cut from March 2026 to February. However, analysts believe inflation may still decline only gradually, meaning a rate cut as early as December this year remains possible.
As is customary, the September inflation figure will be used to adjust various welfare benefits, including Universal Credit, disability allowances, and the state pension. The International Monetary Fund (IMF) also forecast last week that the UK will have the highest inflation rate among G7 countries both this year and next.
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