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Pension Tax

Your pension counts as taxable income, which means that if you receive more than a certain amount per year you will be due to pay income tax.

On this page you will find information about:

Do I have to pay tax on my pension?

If you are required to pay tax on your pension, it will usually be taken at the source through the PAYE scheme. Your pension payer will pay a percentage of the amount directly to HMRC. If tax is also due on your state pension, this will be removed from your other pension or annuity payments. In this case you will still receive the full state pension, but you will pay more tax on your other pension(s).

If you think that your pension payments will take you over your personal allowance, you should register to complete a Self-Assessment tax return. It is important that you do this, because if you do not pay enough tax you may face a tax bill, possibly including penalties.

If you think you have paid too much tax on your pension you can apply for a Tax refund.

Do I have to pay tax on my state pension?

When you reach state pension age, you no longer need to pay National Insurance, however, you still need to pay Income Tax.

Every year, you receive a tax-free personal allowance, which may vary according to your age. If your total income, including your state pension, exceeds this personal allowance, then you need to pay Income Tax on the excess.

Before you reach state pension age, HMRC will contact you and ask you to complete a P161 form. This form provides details of all your pension income. It is important that you fill it in correctly or you might end up paying too much tax.

For further Tax information, please follow the links below:

  • Income Tax includes:
    What is income tax?
    How is Income Tax calculated?
    How much income tax do I need to pay?
    Income Tax Allowances
    Income Tax Rates and Taxable Bands
    How do I pay income tax?

  • Tax Codes includes:
    Where do I find my Tax Code?
    New Tax Codes
    What does my tax code mean?
    Different Tax Codes
    More than one job
    Emergency Tax Codes

  • Emergency Tax Codes includes:
    What is an Emergency Tax Code?
    What does an emergency Tax Code look like?
    Why do I have a BR/ Emergency Tax Code?
    Can I get a Tax Refund if I have paid Emergency Tax?

  • Construction Industry Scheme includes:
    CIS For Subcontractors
    CIS For Contractors (Employers)

  • VAT (Value Added Tax) includes:
    What is VAT?
    When do I pay VAT?
    How much VAT do I need to pay?
    Do I need to register for VAT?
    How do I pay VAT?
    Can I claim VAT back?

  • Self Assessment includes:
    What is Self Assessment?
    Do I need to complete a Self Assessment tax return?
    How do I get a Self Assessment tax return form?
    How do I register for Self Assessment?
    Can I register for Self Assessment on behalf of a company or trust?
    What is a Unique Tax Reference number (UTR)?
    How do I get a Unique Tax Reference (UTR) number?
    How do I complete my Self Assessment tax return online?
    Can I complete my Self Assessment tax return on paper?
    Record keeping
    Self Assessment Tax return deadlines
    What if I submit my tax return late?
    What if I submit my tax return incorrectly?
    How is my tax calculated?
    Do I need to check my tax calculation?

  • National Insurance includes:
    What is National Insurance?
    What are the different types of National Insurance?
    Who pays National Insurance?
    What is National Insurance used for?
    Do your National Insurance payments affect your Pension and Benefits?
    How much National Insurance should I pay?

  • Corporation Tax includes:
    Who needs to pay Corporation Tax?
    How much Corporation Tax do I need to pay?
    How do I pay Corporation Tax?

  • Inheritance Tax includes:
    What is Inheritance Tax?

  • Capital Gains Tax includes:
    What is Capital Gains Tax?

More Info

Tax Refunds

For more information please see: