Tax when you get a pension
How your tax is paid
The way your pension is taxed depends on:
- the type of pensions you get
- whether the payments are a regular income or a lump sum
- whether you have any other income
If you get the State Pension
When you get your State Pension, it is not taxed before you receive it. You may have to pay tax on it depending on your total income for the tax year.
If you’re working or getting a private pension, you’ll usually pay more tax to include any tax you need to pay on your State Pension. Your tax code will change to collect this.
If you get State Pension, find out how tax on your State Pension is calculated.
If the State Pension is your only income
If you go over your Personal Allowance and you have tax to pay on your State Pension, HMRC will send you a Simple Assessment tax bill. This will tell you how much you owe and how to pay it.
If your income is below your Personal Allowance, you will not usually need to pay tax.
If you get a private or workplace pension
Most pension providers deduct Income Tax using Pay As You Earn (PAYE).
Your private pension provider will usually take off any tax you owe before they pay you. This may include any tax you owe on your State Pension.
If you have more than one pension provider (for example, from a workplace pension and a personal pension) or employer only one will take the tax for the State Pension.
You may have a different tax code for each pension and job.
At the end of the tax year you’ll get a P60 from your pension provider showing how much tax you’ve paid.
If you pay too much tax on your pension, you can check how to claim a refund.
If you send a Self Assessment tax return
You must fill in a Self Assessment tax return after the end of the tax year.
You must include any income from your State Pension and private pensions.