Tax when you get a pension

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How your tax is paid

The way tax is paid depends on the kind of pension you get, and whether you have any other income.

If you get the State Pension and a private pension

Your pension provider will usually take off any tax you owe before they pay you. They’ll also take off any tax you owe on your State Pension.

If you get payments from more than one provider (for example, from a workplace pension and a personal pension), HM Revenue and Customs (HMRC) will ask one of your providers to take the tax off your State Pension.

At the end of the tax year you’ll get a P60 from your pension provider showing how much tax you’ve paid.

If the State Pension is your only income 

If you go over your Personal Allowance and you have tax to pay, HMRC will send you a Simple Assessment tax bill. This will tell you how much you owe and how to pay it.

After your first year of getting the State Pension, you’ll pay tax based on 52 weeks of payments each year.

If your income is below your Personal Allowance, you usually will not need to pay tax.

If you continue to work

Your employer will usually take any tax due off your earnings and your State Pension. This is called Pay As You Earn (PAYE).

If you’re self-employed you must fill in a Self Assessment tax return at the end of the tax year. You must declare your overall income, including the State Pension and money from private pensions, for example your workplace pension.

If you have other income

You’re responsible for paying any tax you owe on income other than money from your pensions. You might have to fill in a Self Assessment tax return.

If you owe any tax on investment income, HMRC will send you a calculation telling you how much you owe and how to pay it.

You can claim a tax refund if you’ve paid too much tax.

Tax codes

If your income only comes from one source you’ll usually have one tax code.

You can have several tax codes if you have income from more than one source.

You can get your tax code corrected if you think it’s wrong.

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Part of Plan your retirement income: step by step

  1. Step 1 Check when you can retire

    1. Check what age you can get your State Pension
    2. Find out about working after you reach State Pension age
    3. Find out if you can retire early with your workplace or personal pension

  2. and Check how much pension you could get

    1. Find out how much State Pension you could get (your forecast)

    You may also be paying into a:

    1. Find out if you’ll pay tax on your pension
    2. Find contact details for a lost pension

  3. Step 2 Increase your pension

    You might be able to increase the amount you get if you delay your pension.

    1. Find out about delaying your pension

    You might be able to pay voluntary contributions to fill in gaps in your National Insurance record (such as, from when you were not working or claiming benefits).

    1. Check if you can pay voluntary National Insurance contributions

    For advice about increasing your workplace or private pension, speak to a financial adviser.

    1. Find a financial adviser through Unbiased

  4. Step 3 Check what other financial support you could get

    Check what financial help you could get if you:

    You can also get free bus travel if you:

  5. Step 4 Decide when to retire

    1. Get advice on planning your pension and deciding when to retire