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 allowances you'll still have to pay tax.
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To work out if you are a taxpayer follow these three steps (these are covered in more detail below):
If your taxable income is more than your tax-free allowances, you'll have to pay tax and must contact HMRC 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'll be able to claim a refund.
Some income is taxable and some is non-taxable. You compare only your taxable income with your tax-free allowances in a tax year (6 April to 5 April) to see if you're a taxpayer.
We've included the most common types of taxable and non-taxable income below. However, please also refer to the full list of taxable and non-taxable income by following the link at the end of this section.
Your taxable income includes:
If you're married or in a civil partnership and have income from savings, investments or property held in joint names you're usually treated as getting half the income each. This means you may only have to pay tax on your half of the joint income. If you're not married or you're not in a civil partnership count only your share of joint income.
Non-taxable income includes:
Your tax-free allowances are the amount of income you can get without paying tax. They include the Personal Allowance, Blind Person's Allowance, Married Couple's Allowance and Maintenance Payments Relief. More on these in the second link below.
From 6 April 2013, the amount of your Personal Allowance depends on your date of birth and your income in the tax year. The higher Personal Allowances for people born before 6 April 1948 will not be increased.
|Personal Allowance rates||2013-14||Income limit (see note)|
|Born after 5 April 1948||£9,440||£100,000|
|Born between 6 April 1938 and 5 April 1948||£10,500||£26,100|
|Born before 6 April 1938||£10,660||£26,100|
If you exceed the income limits shown in the table above your Personal Allowance will be reduced by £1 for every £2 above the limit. If you were born before 6 April 1948 your personal allowance is not reduced below £9,440, unless your income is above £100,000.
If you're registered as blind with a local authority in England and Wales you can claim Blind Person's Allowance. To claim this in Scotland or Northern Ireland you must be unable to perform any work for which eyesight is essential. As with your Personal Allowance, this is an amount of income you can get without paying tax. For 2013-14 the allowance is £2,160.
Take your tax-free allowances away from your taxable income. If there's anything left you are a taxpayer and must contact HMRC if you're not already paying tax. If there's nothing left you shouldn't be paying tax and may be due a refund.
Remember that you may qualify for other allowances such as Married Couple's Allowance and Maintenance Payments Relief that can reduce your tax bill. In some cases this may mean that you have nothing to pay at all. Follow the link below for ‘Introduction to tax allowances and reliefs’ to find out more.
If you already pay tax through PAYE, HMRC may be able to collect any extra tax you owe including that on your State Pension through PAYE if:
Otherwise you'll be asked to confirm your income and may need to pay your tax through Self Assessment.
If you want to contact HMRC follow the 'Contact HMRC' link below. If you're self-employed and want to contact HMRC, use the 'Find a Tax Office for the Self Employed' link below. When contacting HMRC you'll need your National Insurance number, if possible.
If you think you're paying too much tax or shouldn't be paying tax at all, follow the link below to find out how you can claim a refund.
The organisations below can provide you with free, independent tax advice. Please note the list isn't exhaustive and the links are to external organisations which are not managed by HMRC.