You pay tax if your total annual income adds up to more than your Personal Allowance.
The table shows the tax rates you pay in each band if you have a standard Personal Allowance of £12,500.
Income tax bands are different if you live in Scotland.
|Band||Taxable income||Tax rate|
|Personal Allowance||Up to £12,500||0%|
|Basic rate||£12,501 to £50,000||20%|
|Higher rate||£50,001 to £150,000||40%|
|Additional rate||over £150,000||45%|
Your total income could include:
- the State Pension you get (either the basic State Pension or the new State Pension)
- Additional State Pension
- a private pension (workplace or personal) – you can take some of this tax-free
- earnings from employment or self-employment
- any taxable benefits 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 £1,073,100
You usually pay a tax charge if the total value of your private pensions is more than £1,073,100. Your pension provider will take off the charge before you get your payment.
Tax if someone inherits your pension
Other rules apply if someone inherits your State pension or your private pension.