The State Pension is taxable income, but DWP pays it without deducting any tax — it is your responsibility (or HMRC’s via your tax code) to ensure the right amount of tax is paid. Whether you need to actively report pension income to HMRC depends on how much you receive, what type of pension it is, and whether you have other income sources.
When You Must Report Pension Income to HMRC
Most pension income is collected through PAYE — the same system used for employment income. Your pension provider deducts tax before paying you, just as an employer would. In this case, you do not need to do anything extra unless your tax code is wrong.
However, you must take action in the following situations:
| Situation | Action Required |
|---|---|
| State Pension is your only income, above £12,570 | Contact HMRC — no PAYE mechanism exists for State Pension alone |
| You receive multiple pensions | HMRC usually adjusts codes, but check your tax position |
| You made an ad hoc SIPP or drawdown withdrawal | May have been overtaxed — reclaim via P55 form or self-assessment |
| Total income exceeds £12,570 with no PAYE employer | Register for self-assessment |
| You are self-employed and receive pension income | Include pension income on your self-assessment return |
How State Pension Is Taxed
The State Pension for 2026/27 is £11,502 per year (£221.20 per week). This sits within the personal allowance of £12,570, so if it is your only income, you pay no tax and have nothing to report.
But the State Pension uses up £11,502 of your £12,570 allowance. That leaves only £1,068 of allowance before tax kicks in. If you also receive a private pension or part-time wages, even a small amount can push you into tax.
HMRC handles this by adjusting the tax code on your private pension (or employer’s payroll) to collect the tax owed on both sources. You should receive a letter (a “coding notice”) when this happens.
If the State Pension is your only income and it does not exceed £12,570: You owe no tax and do not need to contact HMRC.
If you receive State Pension plus other income: HMRC usually adjusts your tax code automatically. But you should check your coding notice is correct — errors are common when you first start receiving State Pension.
Workplace and Personal Pension Income
Private pensions (employer schemes, SIPPs, personal pensions) are paid via PAYE. Your pension provider registers as a PAYE scheme, deducts tax at the appropriate rate, and reports to HMRC in real time. You receive a P60 each April.
You do not need to register for self-assessment simply because you receive a private pension through PAYE. However, you should complete a self-assessment return if:
- Your total taxable income exceeds £100,000 (the personal allowance starts to taper)
- You have more than two pensions or other untaxed income
- You claimed higher-rate tax relief on pension contributions
- You receive foreign pension income
Flexible Drawdown and Ad Hoc SIPP Withdrawals
If you take a one-off or irregular withdrawal from a SIPP or flexi-access drawdown, HMRC does not know in advance how much you will take. The pension provider must apply a tax code — and if they do not have your correct tax code on record, they will use an emergency Month 1 basis, which assumes you will take the same amount every month.
This almost always results in overtaxation.
Worked Example
David, aged 62, takes a £30,000 ad hoc withdrawal from his SIPP. His normal income is £8,000/year from a small private pension. Under the emergency Month 1 code, the provider calculates tax as if David earns £360,000/year (£30,000 × 12). He is overtaxed by approximately £8,400.
David submits a P55 form to HMRC (for partial withdrawals where he intends to take more later). HMRC repays the overpayment within 30 days.
Forms to use for SIPP overpayment refunds:
- P55 — if you have taken a partial withdrawal and expect to take more
- P53Z — if you have emptied a small pension pot
- P50Z — if you have stopped working and emptied your pension pot
Reporting via Self-Assessment
If you need to report pension income that is not captured through PAYE, you register for self-assessment at gov.uk and include all pension income on your return. Self-assessment deadlines:
- 31 January — online return and payment
- 31 October — paper return
If this is your first year on self-assessment, HMRC will usually contact you, but do not wait to be invited if you know you need to file.