The State Pension counts as taxable income but is paid to you without tax taken off. How you pay the tax due on your State Pension will depend on a number of factors. If your income is low there may be no tax to pay - and you may be able to get other benefits.
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The basic 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. However, you don't automatically stop paying Income Tax. If your total taxable income from work, private pensions and your State Pension is more than your tax-free personal allowance you're still a taxpayer. You must contact HM Revenue & Customs (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 may be able to claim a refund.
If you get another pension (like a retirement annuity or a personal or workplace 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 workplace or personal pension seem high but it's because it includes the tax due on your State Pension.
The way that you pay tax on your State Pension depends on whether you are employed or not:
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.
If your pension is taxed through your employer or your pension provider 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. Read the guides below to find out more.
The Pension Service tells HM Revenue & Customs (HMRC) how much State Pension you receive.
If you think you're paying too much tax through your pension, or shouldn't be paying tax at all, there are steps you can take to claim a refund.