Will you pay tax on your State Pension from 2027?
The Budget on 28 October 2026 announced a Pension Tax Allowance. From 6 April 2027, people over State Pension age with total income up to £13,036.40 will pay no income tax, and those just above get a smaller reduction. Answer three questions to see your 2027/28 estimate.
Your 2027/28 estimate
Total income: £13,036.40 a year
£93.28 less income tax
Income tax: £93.28 without the allowance, £0.00 with it.
Your income is no more than the full new State Pension (£13,036.40), so the allowance removes your income tax.
You do not need to claim it. HMRC applies it automatically through your tax code or Self Assessment.
An estimate for 2027/28 using the rules announced in the 28 October 2026 Budget, before legislation. Tax is worked out as if all income is taxed like pensions and pay; savings, property and dividend income have their own rates. It assumes the standard £12,570.00 Personal Allowance. Your answers stay on this page and are not saved.
Pension Tax Allowance examples for 2027/28
For someone over State Pension age in England, Wales or Northern Ireland, with income taxed like pensions and pay.
| Total income | Situation | Tax without | Allowance | Tax with |
|---|---|---|---|---|
| £10,300.00 | Within the Personal Allowance | £0.00 | £0.00 | £0.00 |
| £12,800.00 | Between the Personal Allowance and the full new State Pension | £46.00 | £46.00 | £0.00 |
| £13,036.40 | Exactly the full new State Pension | £93.28 | £93.28 | £0.00 |
| £13,186.40 | Slightly above the full new State Pension | £123.28 | £44.00 | £79.28 |
| £13,300.00 | Near the end of the withdrawal range | £146.00 | £6.13 | £139.87 |
| £14,000.00 | Above the withdrawal range | £286.00 | £0.00 | £286.00 |
How the allowance is worked out
- Add up your total income for the tax year, including the State Pension. ISA income is left out.
- If it is £12,570.00 or less, you pay no income tax anyway.
- If it is no more than £13,036.40, the full new State Pension, the allowance removes your income tax. GOV.UK’s worked example has £93.28 of tax removed.
- Above £13,036.40, the allowance starts at £94.00 and falls by £1 for every £3 of extra income, reaching nothing at £13,319.
- The allowance can only reduce tax you would otherwise pay; it is never paid out as money.
The OOTLAR describes the value as 20% of the gap between the full new State Pension and the Personal Allowance, which is £93.28. GOV.UK’s withdrawal point (£13,319) and its £44 example both match a starting value of £94.00, so this calculator uses that. These rules were announced in the Budget and still need to be legislated.
For the rules in the current tax year, read State Pension and income tax, or estimate tax on all your retirement income with the income tax in retirement calculator.
Pension Tax Allowance questions
What is the Pension Tax Allowance?
A new income tax reduction announced in the 28 October 2026 Budget. From 6 April 2027, people over State Pension age whose total income is no more than the full new State Pension (£13,036.40 in 2027/28) will not pay income tax. It is planned for 2027/28, 2028/29, 2029/30.
Why was it needed?
The full new State Pension rises to £250.70 a week from April 2027, which is £13,036.40 a year. That is £466.40 above the £12,570.00 Personal Allowance, which is frozen. Without the allowance, someone with only the full new State Pension would owe £93.28 of income tax.
How much is the Pension Tax Allowance worth?
Up to £94.00 off your income tax. For every £3 of income above £13,036.40, it falls by £1, and it is fully withdrawn at £13,319. For example, GOV.UK says someone with £13,186.40 of income gets a £44 allowance.
Do I need to claim it?
No. GOV.UK says HMRC will use the information it holds on your State Pension age and income to apply it automatically. Any tax still due is collected through PAYE or Self Assessment as now.
Does it change my Personal Allowance?
No. The Personal Allowance stays at £12,570.00. The Pension Tax Allowance is a separate reduction in the tax you pay, so it only matters if your income is above £12,570.00.
What income counts?
Total income from all sources: State Pension, private and workplace pensions, pay, self-employment, savings interest, property and dividends. Income inside an ISA does not count.
Does it apply in Scotland?
Yes. GOV.UK says eligible Scottish taxpayers get the Pension Tax Allowance, worked out using the 20% basic rate rather than the Scottish starter rate.