Any workplace, personal (including a retirement annuity) or foreign pensions you get are taxable. How and whether you pay tax on your pension income depends on which type of pension you get and your overall taxable income after your tax-free allowances.
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How much tax - if any - you will pay on your pension income depends on the overall amount of taxable income you have.
Your taxable income may include:
If your taxable income is greater than your tax allowances you'll pay tax on some or all of your pension income. If your taxable income is equal to or less than your allowances you won't pay any tax on your pension income.
Income from all these types of pension scheme is paid to you by the pension or annuity provider with tax already taken off via the PAYE (Pay As You Earn) System. HM Revenue & Customs (HMRC) sends the provider your tax code telling them how much tax to deduct - including any due on your State Pension - taking into account your tax allowances. Find out more by following the second link below.
You'll get a form P60 End of Year Certificate at the end of the tax year showing your pension and the tax taken off. Keep this in case you have to fill in a tax return or need to claim tax back. Read the related guides to understand more.
Before 6 April 2007 retirement annuities weren't paid through PAYE. Instead they were paid with 22 per cent tax already deducted. If your level of income meant you didn't need to pay tax you made a claim to receive the payment 'gross' (without tax taken off).
Read the guide below to check whether you qualify to claim tax back if you paid tax this way unnecessarily.
Your UK pensions and State Pension will still be taxable in the UK unless there's a 'double taxation agreement' (covering pensions) with the country where you decide to live. If there is an agreement, you'll usually pay tax in that country.
If you get a pension for public service - such as a teacher's, nurse's, civil service or forces pension -it'll normally be taxable in the UK. You'll have to fill in a Self Assessment tax return to claim your personal tax-free allowances.
If you receive a pension from a foreign country while you're living in the UK it will be subject to UK tax rules. How much tax you'll pay on overseas income depends on whether you're 'resident', 'ordinarily resident' or 'domiciled' in the UK. Read the related guidance below to find out more.