In this section:
Tax on your State Pension
The basic State Pension is based on the National Insurance contributions (NICs) you've paid or have been credited with during your working life. It counts as taxable income but is paid to you without tax taken off. How you pay the tax due on your State Pension will depend on a number of factors. However, if your income is low there may be no tax to pay - and you may be able to get other benefits.
How do you know if you should be paying tax on your State Pension?
When you reach State Pension age you no longer pay NICs, but you don't automatically stop paying Income Tax. If your taxable income - including your State Pension - is more than your tax-free personal allowance (which depends on your age) you're still a taxpayer and must contact us if you're not already paying tax. If your tax-free allowances are the same as or more than your taxable income, no action is necessary. If you think that you shouldn't be paying tax but are, you may be able to claim a refund.
Taxable and non-taxable income at a glance
Do you have to pay tax in retirement?
It's important that you fill in the form we send you just before State Pension age - form P161 Pension Enquiry - giving details of your income so that we can make sure you pay the right tax from State Pension age. If you don't receive one you should get in touch with your Tax Office.
Why it's important to fill in your Pension Enquiry form
How you pay tax on your State Pension
If you already get another pension
If you get another pension (eg a retirement annuity or a personal or company pension) and you pay tax on this you'll usually pay tax on your State Pension at the same time. This is done through the PAYE (Pay As You Earn) scheme - your Tax Office sends a tax code to your pension payer to show them how much tax to take off, including any due on your State Pension. This might make the tax on your company or personal pension seem high but it's because it includes the tax due on your State Pension.
Tax if you don't get another pension
If you don’t normally complete a tax return, but think you need to in one of two ways:
- if you're working, you'll pay tax through your employer's PAYE scheme depending on the amount you earn
- if you're not working, you'll need to pay tax through Self Assessment by completing a tax return
If you don’t normally complete a tax return, but think you need to in order to pay tax on your State Pension please contact us.
How to contact HM Revenue & Customs
Read an introduction to Self Assessment
Checking that your tax code is right
If your pension is taxed through your employer or your pension payer you'll receive a PAYE Coding Notice (form P2) from your Tax Office at least once a year telling you your tax code. It's important to check this to make sure it shows the right amount of tax on your State Pension. Read our guide below to find out more.
Pensions, state benefits and your tax code
Understanding your PAYE Coding Notice
If you think you've paid too much tax on your State Pension
If you think you're paying too much tax through your pension or shouldn't be paying tax at all, there are steps you can take to claim a refund.
Claiming back tax if you've had too much deducted from your pension
More useful links
More about the basic State Pension and qualifying years on the Directgov website
More about National Insurance on the Directgov website
