Tax on State Pension

Taxable, paid gross, collected via PAYE on other income or via Simple Assessment if you have none. The frozen allowance is the looming story.

2026/27 tax position

Personal allowance

Frozen to April 2028

£12,570

Full new SP annual

£12,547.60

Headroom inside allowance

The full new SP sits just inside the frozen allowance for one more year

£22.40

How tax is collected

State Pension is paid gross. If you have other PAYE income (a private pension drawing as an annuity, for example), HMRC adjusts that scheme's tax code to collect tax on the combined total1. If State Pension is your only income above the allowance, HMRC issues a Simple Assessment each year setting out the bill.

The frozen-allowance bite

The personal allowance has been £12,570 since April 2021 and is frozen until April 2028. With the triple lock running and the full new SP at £12,547.60 in 2026/27, the next two upratings will push the SP over the allowance even if you have no other income2. That tips a previously tax-free position into a small annual bill.

If you defer

The extra weekly SP from deferral is also taxable in the year you receive it. Be mindful that resuming a higher figure can push earnings into a higher band if you have other income3.

By Oliver Wakefield-Smith, Founder, Digital Signet.

Rates current for 2026/27 · Verified Q2 2026 · Next refresh after Autumn Budget 2026