What is Taxed
You pay tax if your total annual income adds up to more than your Personal Allowance. Find out about your Personal Allowance and Income Tax (external link) rates.
Your total income could include:
- the State Pension you get (either the basic State Pension (external link) or the new State Pension (external link))
- Additional State Pension (external link)
- a private pension (workplace or personal) - you can take some of this tax-free (external link)
- earnings from employment or self-employment
- any taxable benefits (external link) you get
- any other income, such as money from investments, property or savings
You may have to pay Income Tax at a higher rate if you take a large amount from a private pension. You may also owe extra tax at the end of the tax year.
If your Private Pensions Total More than £1,055,000
You usually pay a tax charge if the total value of your private pensions is more than £1,055,000 (external link). Your pension provider will take off the charge before you get your payment.