Is the State Pension taxable

Yes. The State Pension is taxable income, but the Department for Work and Pensions pays it without deducting any tax. It uses up some or all of your Personal Allowance, so tax on it is usually collected through the tax code on a private pension or wages, and if it is your only income and exceeds your allowance HMRC sends a Simple Assessment bill instead.

Is the State Pension really taxable?

Section 577 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) brings the State Pension into charge as pension income, along with graduated retirement benefit and some bereavement pensions. Section 578 says the taxable amount for a tax year is the full amount accruing in that year, regardless of when it is actually paid.

HMRC’s guidance “How your State Pension is taxed” puts it plainly: your State Pension is taxable income, but tax is not taken off before you get it. You only pay tax if your total taxable income, including the State Pension, is higher than your allowances. For 2026 to 2027 the standard Personal Allowance is £12,570.

How much of the Personal Allowance does the State Pension use?

From April 2026 the full new State Pension is £241.30 a week and the full basic State Pension is £184.90 a week, up 4.8% from £230.25 and £176.45. Fifty two weeks at the full new rate would be £12,547.60, only just below the allowance.

HMRC does not simply multiply the new rate by 52. Its guidance says that for people who started receiving the State Pension on or after 6 April 2010, a full year is taxed as one week at the rate before the April increase plus 51 weeks at the new rate, because of the way payment weeks fall. It uses your entitlement for the year, not the payments you actually received.

2026 to 2027, full rate all year	New State Pension	Basic State Pension
1 week at the old rate	£230.25	£176.45
51 weeks at the new rate	£12,306.30	£9,429.90
Taxable State Pension	£12,536.55	£9,606.35
Personal Allowance left	£33.45	£2,963.65

Someone on the full new State Pension therefore has almost no allowance left for anything else. Anyone with a protected payment, Additional State Pension or extra pension from deferring will already be over the allowance on State Pension alone.

Why is the tax collected through other income?

Because nothing is deducted at source, HMRC collects the tax wherever there is a PAYE source. GOV.UK guidance says that if you get the State Pension and a private pension, the private pension provider will usually take off any tax you owe, including tax on the State Pension. If you have more than one private pension, HMRC asks one of the providers to do it. If you are still working, your employer usually collects it.

It works through your tax code. HMRC reduces the allowance in the code by the State Pension, so the private pension or wages are taxed more heavily. Where the State Pension and other untaxed items exceed the allowance, the code becomes a K code, which adds an amount to taxable pay. A K code cannot make the payer deduct more than half of your pre tax wages or pension.

When the State Pension first starts you may be put on an emergency code until the end of the tax year. GOV.UK suggests checking your code online to make sure the State Pension is included.

What if the State Pension is your only income?

If your total income is below your Personal Allowance, there is no tax to pay. Most people on the full new State Pension with no other income fall into this group for 2026 to 2027, as the table shows.

If it is above the allowance, there is no PAYE source to collect from, so HMRC sends a Simple Assessment (form PA302). HMRC’s guide for pensioners explains that DWP passes the State Pension figures to HMRC automatically and the letter shows a full 52 weeks’ entitlement. You do not need to file a tax return. For 2025 to 2026, HMRC said pensioners would start receiving letters from 12 August 2026.

A letter issued before 31 October 2026 for the 2025 to 2026 tax year must be paid by 31 January 2027; one issued on or after that date must be paid within three months of the letter. If anything is wrong, you have 60 days to contact HMRC.

What changes from 2027 to 2028?

The Personal Allowance is frozen at £12,570, and Budget 2025 maintained it at that level from April 2028 to April 2031. With the State Pension rising each April under the triple lock, the full new State Pension may overtake the allowance from 2027 to 2028.

Budget 2025 said the government will ease the burden for pensioners whose sole income is the basic or new State Pension without any increments, so they do not have to pay small amounts of tax through Simple Assessment from 2027 to 2028 if the pension exceeds the allowance from that point. It said it was exploring the best way to achieve this and would set out more detail. People with a private pension, savings income above their allowances, or deferral increments are not within that description, so the normal rules continue to apply to them.

How does this work in your first year of State Pension?

HMRC taxes you on the weeks of entitlement from your start date to the end of the tax year, even if the first payment arrives later. Its example is entitlement from 4 January 2026 at £170 a week, taxed as 13 weeks, £2,210, although the first payment came in March. After the first year, a full 52 weeks of entitlement is used each year.

If you complete Self Assessment, include your annual State Pension entitlement on the return. Copying the total of payments received from bank statements can give the wrong figure, because payment dates do not line up exactly with the tax year.

A worked example

Illustration only. Margaret receives the full new State Pension for all of 2026 to 2027 and a workplace pension of £6,000. She lives in England and has no other income.

• Taxable State Pension: £12,536.55
• Workplace pension: £6,000
• Total income: £18,536.55
• Less Personal Allowance: £12,570
• Taxable at 20%: £5,966.55, so tax of £1,193.31

All of this is collected by the workplace pension provider through her tax code, because only £33.45 of her allowance is left after the State Pension. To Margaret it looks as if her workplace pension is taxed at about 20% from the first pound, which is correct.

What mistakes do people make?

• Assuming the State Pension is tax free because it arrives with no tax deducted.
• Thinking the private pension provider has overtaxed them, when it is collecting tax on the State Pension too.
• Ignoring a Simple Assessment letter or missing the 60 day window to dispute it.
• Reporting payments received rather than annual entitlement on a tax return.
• Forgetting that savings interest is added on top; see our guide to the Personal Savings Allowance.
• Missing allowances that could help, such as Marriage Allowance where one partner has income below the allowance.

If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

Related Accountapedia entries

• How tax on pension income is collected
• Savings income tax rates rising from April 2027
• The personal allowance explained
• Deferring the State Pension
• The £5,000 starting rate for savings
• Residential property in a SIPP: taxable property charges

Sources

• legislation.gov.uk: Act 2003 c. 1, section 577
• legislation.gov.uk: Act 2003 c. 1, section 578
• GOV.UK: How your state pension is taxed
• GOV.UK: Income tax rates
• GOV.UK: Over 12 million pensioners to receive 575 state pension boost
• GOV.UK: What youll get
• GOV.UK: How much you get
• GOV.UK: Print
• GOV.UK: Print
• GOV.UK: Simple assessment guide for pensioners

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.