Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Employment Income Manual

From
HM Revenue & Customs
Updated
, see all updates

The taxation of pension income: Amount of pension income charged to tax

The amount of taxable pension income is determined by reference to the relevant Chapter of ITEPA 2003 that applies to the pension or annuity in question. In many cases, the taxable pension income for a tax year is the amount accruing in that year irrespective of when any amount is actually paid. Where accruals basis applies, the pension, etc. should be assessed on the amounts that the pensioner is entitled to in the tax year

Pensioners are often content to pay income tax on the amount received in a year, as, in most years the amounts accruing and received are similar. However, it is possible in certain circumstances for the amounts to be different. If a taxpayer requests the statutory basis this should be accepted.

The following table shows how to find the amount of taxable pension income for different categories of pension income.

### Type of income ### Amount taxable
   
United Kingdom pensions (see EIM74003) Full amount accruing in the tax year
Foreign pensions See EIM74500 
United Kingdom social security pensions Full amount accruing in the tax year (see EIM74600)
Pensions or annuities, etc. from approved retirement benefits schemes (see EIM74009) for 2005-06 and earlier Full amount accruing in the tax year
Annuities paid under former approved superannuation funds (see EIM74009) for 2005-06 and earlier Full amount paid in the tax year
Annuities, etc. from approved personal pension schemes (see EIM74009) for 2005-06 and earlier Full amount of annuity received or income withdrawn in the tax year
Pensions (including annuities and income withdrawals) under registered pension schemes (see EIM74014) for 2006-07 onwards Full amount accruing in the tax year
Certain lump sums under registered pension schemes (see EIM74014) for 2006-07 onwards Depending on circumstances either full amount or 75% of full amount paid in the tax year
Annuities under retirement annuity contracts (see EIM74007) for 2005-06 and earlier Full amount of annuity arising in the tax year
Other employment related annuities (see EIM74007): UK annuities Full amount of annuity arising in the tax year
Other employment related annuities (see EIM74007): Foreign annuities See EIM74500 
Certain overseas government pensions paid in the United Kingdom (see EIM74006) Full amount accruing in the tax year
The House of Commons Members Fund (see EIM74309) Total amount of payments made in the tax year
Return of surplus employee additional voluntary contributions (see EIM74013) for 2005-06 and earlier Total amount or value of payments made in the tax year
Pre-1973 pensions paid under OPA 1973 See EIM74500 
Voluntary annual payments: UK source (see EIM74011) Full amount accruing in the tax year
Voluntary annual payments: Foreign source (see EIM74011) See EIM74500 

EIM74102has examples of how the accruals basis applies where pensions are paid in advance. EIM74103 considers the treatment of payments of arrears under the accruals basis.