You may have to pay Income Tax on your pension if your total annual taxable income exceeds your Personal Allowance. This applies whether you receive the State Pension, a workplace pension or a personal pension.
Your total taxable income can include the basic or new State Pension, Additional State Pension, private pension payments, earnings from employment or self-employment, taxable benefits and income from savings, investments or property.
The amount of tax you pay depends on your total income and the Income Tax rates and allowances that apply to you. You should therefore consider all your taxable income, rather than looking at your pension payments in isolation.
If you take money from a private pension as a lump sum, you may also have to pay Income Tax on amounts exceeding your available lump sum allowances. Taking a large lump sum could push you into a higher tax band and leave you with additional tax to pay at the end of the tax year.
If your pension provider pays you money owed from previous tax years as a single lump sum, you may temporarily pay too much tax. If this happens, you can ask HMRC to recalculate your tax using a written breakdown (usually called a 'payment schedule') from your pension provider showing how much was due for each tax year.
