1. What’s taxed
You pay tax if your total annual income adds up to more than your Personal Allowance. Find out about your Personal Allowance and Income Tax rates.
Your total income could include:
- the State Pension you get (either the basic State Pension or the new State Pension)
- Additional State Pension
- a private pension (workplace or personal) - you can take some of this tax-free
- earnings from employment or self-employment
- any taxable benefits you get
- any other income, such as money from investments, property or savings
You may have to pay Income Tax at a higher rate if you take a large amount from a private pension. You may also owe extra tax at the end of the tax year.
If your private pensions total more than £1 million
You usually pay a tax charge if the total value of your private pensions is more than £1 million. Your pension provider will take off the charge before you get your payment.