Tax on company, personal or foreign pensions

Any company, personal (including 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.

How much tax will you pay on your pension income?

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:

the State Pension
income from a retirement annuity, personal, stakeholder and/or company pension
any taxable State Benefits you may qualify for
savings or investments
income from a job if you work after State Pension age

If your taxable income is greater than your tax allowances, you'll pay tax on some or all of your pension income in line with current Income Tax rates. If your taxable income is equal to or less than your allowances you won't pay any tax on your pension income.

How you pay tax on company and personal pensions, including retirement annuities

Income from all of these types of pension schemes is paid to you by the pension/annuity provider with tax already taken off via the PAYE (Pay As You Earn) System.

Your Tax Office 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 (see link below).

You'll get a P60 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. Follow the links below to understand more.

Some pensions that started before 6 April 2007 are still being paid tax-free but this changed from 6 April 2009. Follow the link below to 'Taxation of small pensions' to find out more.

Tax on income from retirement annuities before 6 April 2007

Before 6 April 2007 retirement annuities weren't paid through PAYE. Instead they were paid to you with 22 per cent tax already deducted unless you made a claim to receive the payment 'gross' (without tax taken off) because your level of income meant you didn't need to pay tax.

Follow the link below to check whether you are eligible to claim tax back if you paid tax this way unnecessarily.

Tax on retirement annuities

How will your pensions be taxed if you retire abroad?

Your UK pensions and your 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 - perhaps a teacher's, nurse's, civil service or forces pension - then 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.

For more details call HM Revenue and Customs (HMRC) Residency on 0845 070 040 (+44 151 210 2222 if you're calling from abroad) from 8.00 am to 5.00 pm, Monday to Friday (excluding Bank Holidays).

Tax on foreign pensions

If you receive a pension from a foreign country while you are 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 articles below to find out more.