What’s taxed

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:

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.

  1. Step 1 Check when you can retire

  2. and Check how much pension you could get

  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

  5. Step 4 Decide when to retire