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Should you be paying tax on your State Pension?

The State Pension is based on the National Insurance contributions you've paid, or have been credited with, during your working life.

When you reach State Pension age you no longer pay National Insurance contributions, 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 you're still a taxpayer and must contact HM Revenue & Customs (HMRC) if you're not already paying tax.

Remember, your personal allowance may change with age and your income. 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

• Contact HMRC - Income Tax enquiries for individuals, pensioners and employees Opens new window

• Age-related tax allowances

How you pay tax on your State Pension

If you already get another pension

If you get another pension (like 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. HMRC sends a tax code to your pension payer to tell 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 only get the State Pension

The way that you pay tax on your State Pension depends on whether you are employed or not:

• 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, you'll need to use form SA1 to register for Self Assessment before you can get a tax return.

• Form SA1 to register for Self Assessment Opens new window

• Registering for Self Assessment Opens new window

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 HMRC 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. Follow the links 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 pension

The Pension Service tells HM Revenue & Customs (HMRC) the weekly amount of state pension you receive.

If you think you're paying too much tax through your pension, or shouldn't be paying tax at all, you can claim a refund.

• Claim back tax if you've had too much deducted from your pension

More useful links

• Understanding the basic State Pension (pensions and retirement planning section)

• National Insurance - the basics

• Do you have to pay tax in retirement? (pensions and retirement planning section)

• Claiming back overpaid National Insurance contributions

• Income Tax rates and allowances Opens new window

Useful contacts

• Money, tax and benefits contacts