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