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How do I pay my Income Tax as a pensioner?

  • If you are an employee, HM Revenue & Customs will send you form P161 to fill in one month before you reach State Pension Age (SPA). The form is a basis to work out your Personal Allowance (PA) and your Income Tax liability.
  • If you are self-employed, you have to fill in form P161 and send it to HMRC on your own.
  • If your taxable income including your State Pension does not exceed your age-related Personal Allowance (PA), you do not have to take any further action. If you pay Income Tax, although your taxable income is lower than your PA, you should contact HMRC as soon as possible.
  • If your taxable income including your State Pension exceeds your age-related Personal Allowance (PA), you will need to register for Self Assessment and submit a tax return to HMRC. You must submit your tax return and pay your Income Tax in due time.
  • If you receive another pension such as a personal or company pension which is already taxed, you will pay Income Tax on your State Pension at the same time. HMRC will just inform your private or occupational (company) pension provider how much Income Tax to deduct from your company or private pension. As a result, the Income Tax on your personal or company pension may seem high, but it includes the Income Tax due on your State Pension.
  • If you are employed and receive State Pension at the same time, your employer will pay your Income Tax, taking into account your pension and employment income. To do so your employer will use PAYE scheme (Pay As You Earn).
  • If you are self-employed and receive your State Pension at the same time, you will need to complete a Self Assessment tax return, taking into account all your taxable income including State Pension. You must submit your tax return and pay your Income Tax in due time.

Capital Business Links Ltd provides a vast range of advisory services for pensioners dealing with Income Tax, Inheritance Tax (IHT) or Capital Gains Tax (CGT). For more information or to arrange an appointment with one of our tax consultants, please contact us on telephone number 0208 567 99 44 or at our e-mail address.