Do I have to pay any taxes on my State Pension?

As a pensioner you remain liable for Income Tax on all your taxable income including basic State Pension (BSP), State Second Pension (S2P), other private and occupational pensions, pension bonds and annuities, earnings from employment and self-employment, bank and building society interests, dividends on company shares, rents, trust income and some state benefits.

• More about Income Tax

Those who have reached State Pension Age – regardless of whether they receive State Pension or not – are entitled to Personal Allowance (PA), which is a tax-free amount, they can earn without having to pay any Income Tax. In other words, they pay Income Tax only on the income above a certain amount, which is:

There are two additional income limits for age-related Personal Allowances, namely:

• If your taxable income (after deducting your PA) is more than £22,900 and less than £100,000, your age-related PA is reduced by £1 for every £2 of the income over the £22,900 limit until the Basic Rate Allowance of £6,475 for the tax year 2010-11 (£7,475 for the tax year 2011-12) is reached. For example, if your income is £23,900, that is £1000 over the above limit, your age-related PA will be reduced by £500 to £ 8,990.
• If your taxable income (after deducting your PA) exceeds £100,000, your PA is reduced by £1 for every £2 of the income over the £100,000 limit until your total PA is exhausted.

Capital Business Links Ltd has been supporting pensioners with professional tax advice for years. We will be happy to assist you in calculating your Income Tax and in preparing your Self Assessment Tax Return. We also recommend our tax service for those who are going to manage Inheritance Tax (IHT) or Capital Gains Tax (CGT). To receive more information or to arrange an appointment with one of our tax consultants contact us on telephone number 0208 567 99 44 or at our e-mail address.