Finance

State pension: Do you pay tax on state pension?

No tax is deducted before your State Pension is paid to you, but if your total taxable income is greater than your allowances and reliefs then you have to pay tax.

You will pay tax on the income that exceeds your allowance, the standard personal allowance for the tax year 2020/21 is £12,500.

Your personal allowance may be less or more than this depending on a number of factors, but HMRC should tell you how much it is each time it changes.

You should each year that the correct amount of income tax has been taken off your State Pension and the other income you might receive.

HMRC may not be able to collect tax on your pension through PAYE, so you may need to complete a Self Assessment tax return each year, or HMRC may send you a Simple Assessment.



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