Tax if you're employed and getting a pension

Reaching State Pension age doesn't always mean that you stop working or stop paying tax. If you continue working, or if you return to work, the amount of tax you'll pay - and how you'll pay it - will depend on the overall level of your taxable income and the type of pension income you're getting.

If you're employed and getting just the State Pension

The State Pension counts as taxable income but is paid to you without any tax taken off. If your State Pension, your job and any other sources of income add up to more than your tax-free allowances - such as Personal Allowance or Blind Person's Allowance - you'll need to pay tax on your total taxable income.

If tax is due on your State Pension, HM Revenue and Customs (HMRC) normally arrange for this to be deducted by your employer from your earnings through the PAYE (Pay As You Earn) tax code system. They do this by reducing your tax-free allowances by the amount of State Pension income you receive. This ensures you pay the right amount of tax due.

You can find out more about how your State Pension appears in your employment tax code by following the links below.

If your affairs are complex - for example you have investment income above a certain level, or foreign income - we may also ask you to fill in a Self Assessment tax return.

If you're employed and getting more than one pension (including the State Pension)

If you're employed and get a company and/or personal pension, you will have several tax codes and payslips - from a combination of your employer and your pension provider(s).

If you're receiving the State Pension as well, HMRC usually tries to collect all of the tax due on it from just one company/pension provider by reducing your tax-free allowance as described in the previous section. If you have several personal/company pensions, HMRC normally collects the tax due on each from each pension provider separately.

Where you have more than one payslip and tax code, it's important to understand and check them all. If you think a code is wrong you can ask to get it corrected. Follow the links below to find out more.

Tax when returning to employment after retirement

If you start a new job after retiring, your employer will need to tell HMRC so they can make sure that you're paying the right tax.

If you weren't paying tax in retirement

You'll need to start paying tax if your total income - including State Pension and/or any other pension you get together with your employment earnings - exceeds your tax-free allowances - such as Personal Allowance and any blind person's allowance.

Once your employer tells HMRC that you've started work you will be issued a tax code and the right amount of tax will be collected through PAYE.

As described earlier, if tax is due on your State Pension, HMRC accounts for this by reducing your tax-free allowances by the amount of State Pension you receive.

Blind person's allowance (money, tax and benefits section)

If you were already paying tax in retirement

If you were previously paying tax through PAYE because you already had a company or personal pension, read the earlier sections of this article to understand how you'll pay tax once you start work.

If you weren't previously in PAYE and were filling in a Self Assessment tax return in order to pay tax on your State Pension (and other income), you may be able to pay all of your tax through your employment tax code instead. Your new employer may be able to advise you about this.

You can also call the Self Assessment helpline on 0845 900 0444. It is open from 8.00 am to 8.00 pm, every day except Christmas Day, Boxing Day and New Year's Day.