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HMRC internal manual

Tax Credits Technical Manual

Pensions Income: Pensions income for tax credit purposes


Any of the payments, pensions or annuities in TCTM04302. These mirror the income tax provisions. Broadly, this includes all occupational and personal pensions (including Stakeholder pension), retirement annuities and the basic Retirement Pension and related payments, for example the earnings related addition under the State Earnings Related Pension Scheme (SERPS).


The pensions and other payments in TCTM04303. These are non-taxable war pensions and any increase in pension payable as a result of injury on duty or a work-related illness.

Deferred State Pension

A claimant can defer their State Pension and claim it at a later date. By deferring their State Pension they will be paid extra State Pension once they start to claim their pension. They may be able to choose between;

  • Extra State Pension each week for the rest of their life when they start to claim their State Pension
  • A one-off lump sum payment.

While the State Pension is deferred it should not be taken in or used as income.

Once the claimant has started to receive their State Pension, the amount they receive and any extra State Pension will be treated as pension income.