UK employees pay tax each month with a chunk of their earnings made out to the government, but how does this differ when you become a pensioner?
Whether you’re looking forward to retirement or hoping it doesn’t come around fast, you might be wondering whether you’ll pay tax when you start to receive your State Pension.
Here’s what we know about what is taxed when you start receiving a pension.
Do pensioners pay tax?
The government website explains: “You pay tax if your total annual income adds up to more than your Personal Allowance.”
It says your total income could include the State Pension you get, an additional State Pension or a private workplace or personal pension (some of this can be taken tax-free).
Your total income can also include earnings from when you were employed or self-employed, any taxable benefits you receive or any other income which can include money from investments, property or savings.
What is Winter Fuel Payment?
The government adds: “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.”
What is tax-free for pensioners?
The government website explains what is tax-free for pensioners: “You will not usually pay any tax if your total annual income adds up to less than your Personal Allowance.”
Recommended reading:
- What is National Insurance? Who has to pay and how much you will contribute
- Millions missing out on £10,000 in lost pensions, research reveals
- Martin Lewis urges homeowners to find this switch and avoid £9k bill this winter
It added: “You can usually take up to 25% of the amount built up in any pension as a tax-free lump sum. The most you can take is £268,275.
“If you hold a protected allowance, this may increase the amount of tax-free lump sums you can take from your pensions.
“The tax-free lump sum does not affect your Personal Allowance.
“Tax is taken off the remaining amount before you get it.”
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel