You pay tax if your total annual income adds up to more than your Personal Allowance. Find out about your Personal Allowance and Income Tax rates.
Your total income could include:
- the State Pension you get (either the basic State Pension or the new State Pension)
- Additional State Pension
- a private pension (workplace or personal) - you can take some of this tax-free
- earnings from employment or self-employment
- any taxable benefits you get
- any other income, such as money from investments, property or savings
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.
If your private pensions total more than £1,073,100
The rate of the tax you pay on pension savings above the lifetime allowance depends on how the money is paid to you and when you took your pension savings.
If you took your pension on or after 6 April 2023, you’ll pay Income Tax on some or all of the lump sum if it is more than 25% of the standard lifetime allowance.
If you hold lifetime allowance protection, this may increase the amount of tax-free lump sum you can take from your pensions.
Tax if someone inherits your pension
Other rules apply if someone inherits your State pension or your private pension.
