The tax you pay depends on the source of the income.
Tax and your retirement income
A few points to bear in mind:
- When you’re retired, you’ll still qualify for your personal allowance. This is the amount you can earn each year before you pay tax.
- If you receive multiple sources of income, like the State Pension, private pensions and income from work, these are added together.
- If you take more than the 25% tax-free lump sum from your private pensions, the extra is added to any other income you have and taxed.
- From April 2023, a new 1.25% levy will be introduced on income from employment, even if you’re over State Pension Age.